RBNZ acts aggressively – NZD drops to three and a half year lows
Thursday 8 August, 2019
Daily Currency UpdateNZD - New Zealand DollarThe New Zealand Dollar suffered large losses on Wednesday following the surprise move by the RBNZ to cut interest rates by 50 basis points. Opening the morning at 0.6527, the local currency plummeted to a three and a half year low and more than 2% during the domestic session as the RBNZ set the official cash rate at 1%.Markets were sent into a flurry following the news as the New Zealand Dollar dropped a full cent immediately and saw intraday lows of 0.6377. RBNZ Governor further stated at his press conference following the decision that he could not rule out further cuts this year making his intentions clear that a negative interest rate is possible to fuel GDP and employment growth.The New Zealand Dollar regained some of its losses overnight as the NZD/USD pair is currently trading this morning at 0.6444. We continue to expect support to hold on moves approaching 0.6390 while now any upward push will likely meet resistance around 0.6520.
Key MoversGlobal growth and trade tensions between the United States and China are persisting to be the main drivers for currency markets. The Japanese Yen rose to eight-month highs overnight against the greenback and the Swiss Franc also gained traction as safe haven currency plays are a popular trade at present. Central banks globally are maintaining more dovish tones as not only did New Zealand aggressively cut their interest rates by 50 basis points, but India and Thailand followed suit in lowering their interest rates on Wednesday.10-year yields declined at one point to three-year lows as global economic downturn concerns & speculation of fed reserve rate cuts saw markets on edge. Equities were flat overnight despite the S&P 500 and Dow being down more than 1% at one point.We are light on data releases for Thursday as Chinese Trade Balance figures is the main macro print scheduled today. Markets look towards Fridays release of Chinese inflation figures and the RBA Monetary Policy Statement release.
- NZD/USD: 0.6390 - 0.6500 ▼
- NZD/AUD: 0.9480 - 0.9580 ▼
- GBP/NZD: 1.8500 - 1.9200 ▲
- NZD/EUR: 0.5690 - 0.5820 ▼
- NZD/CAD: 0.8500 - 0.8640 ▼