AUD/USD and NZD/USD Fundamental Daily Forecast – Central Bank Support, Weak Greenback Providing Support

While most investors were focusing on the Fed and demand for risk, Reserve Bank of New Zealand (RBNZ) Governor Adrian Orr said the central bank can support the economy for as long as needed through both quantitative easing and other tools.

The New Zealand Dollar posted a small gain on Friday on light volume due to Good Friday bank closures. Although buyers may have been a little tentative at current price levels due to the thin volume, the market remained underpinned by aggressive monetary moves by the Federal Reserve, and rising demand for risky assets, which dampened the need for U.S. Dollars.

On Friday, the NZD/USD settled at .6094, up 0.0013 or +0.22%.

RBNZ Orr Says Central Bank Can Support the Economy
While most investors were focusing on the Fed and demand for risk, Reserve Bank of New Zealand (RBNZ) Governor Adrian Orr said the central bank can support the economy for as long as needed through both quantitative easing and other tools.

“The Reserve Bank can keep monetary support going for as long as necessary through QE and other tools,’ Orr wrote in an opinion article in the Sunday Star Times on April 5. He said New Zealand is in a “globally enviable fiscal position with significant headroom” and the RBNZ’s activities will ensure the country is able to prosper for generations to come.

“We are all experiencing unnerving times and there are some very hard yards ahead,” he wrote. “Some businesses will fail, unemployment will rise, and banks will at times have to judge whether a firm is illiquid or insolvent when making a financing decision.”

Orr also emphasized the importance of firms working with their bankers and understanding and utilizing the government’s support packages.

“Support each other, think beyond just the next six months, and visualize the role you can and will play in the vibrant, refreshed, sustainable, inclusive New Zealand economy,” Orr wrote.

New Zealand PM Cautiously Optimistic About Coronavirus, Urges Easter ‘Staycation’
New Zealand’s Prime Minister, Jacinda Ardern, said on April 8 she was cautiously optimistic about slowing the spread of the novel coronavirus as authorities reported the lowest number of new daily cases in two weeks.

“We may yet see bumps along the way but I remain cautiously optimistic that we are starting to turn a corner,” Ardern told a media briefing in Wellington.

She also said there was no plan to relax the tough restrictions during Easter and urged everyone to avoid any travel during the long Easter weekend, in mid-April.

“Please do stay at home, stay to save lives and enjoy your ‘staycation’,” Ardern said in Wellington.

“Nothing changes because it’s Easter, the rules remain the same and the police will be enforcing this.”

Short-Term Outlook

At this time, New Zealand Dollar buyers are being driven primarily by the weaker U.S. Dollar and aggressive moves by the Federal Reserve that continue to make U.S. Dollars available. Traders are also being driven by the weakening U.S. employment picture, which is expected to worsen over the near-term.

The daily chart indicates the buying may be strengthening after last week’s change in trend to up and close on the strong side of a retracement zone at .6074 to .5958. The Kiwi is likely to continue to claw higher as long as it stays on the bullish side of this zone.

Leave a Comment

38 views
Share via
Copy link