The New Zealand Dollar tumbled under the double whammy of a dovish RBNZ and less dovish Federal Reserve. NZD/USD closed in New York just under the 0.60 cent support level at 0.5995. The Kiwi had been trading at 0.6065 ahead of the RBNZ meeting outcome and statement. Overnight NZD/USD tumbled to 0.5980 before settling at 0.5995. The Kiwi also slumped against the Aussie and other currencies.
Today New Zealand releases its Annual Budget which will reveal the government’s outlook. While the economic future is not going to look pretty let us not forget that New Zealand is one of the more successful countries in battling the coronavirus outbreak. Jacinda Ardern’s government began to ease lockdown restrictions this week and opened some businesses. While a second wave of infections is expected, the Kiwis are well placed to keep the spread under control. This will allow the economy to recover relatively faster than the rest of the world.
We reported that speculative NZD short bets increased to -NZD 14,953 from -NZD 13,799. This is a supportive factor for the Bird. It may have to weather some heavy selling should the USD stay bid but the Bird can still sprout wings. NZD/USD has immediate support at 0.5980 followed by 0.5930 and 0.5880. Strong support can be found between 0.5580 and 0.5920. Immediate resistance lies at 0.6040 and 0.6100. Strong resistance lies at 0.6200. Look for a likely trade between 0.5970-0.6070 first up. Trade the range shag on this puppy too but a base may be forming.