Nothing but a sea of red for the New Zealand dollar thanks to a very dovish RBNZ statement this week, on top of traders souring on risk as U.S.-China trade tensions and a second wave of coronavirus cases fears rise.
New Zealand Headlines and Economic data
New Zealand business confidence rose to -46% in a preliminary May read vs. -66.6% in April
Ardern thanks ‘team of 5 million’ as New Zealand reopens schools and offices
Increased risk aversion on rising US-China tensions and fears of a new infection wave was likely the catalyst for the Kiwi’s move lower against the majors during the US session.
More fears of a second coronavirus wave sparked risk-off sentiment and a slight Kiwi sell-off during the Asia session, but hopes of an economic recovery as countries end lockdown restrictions turn traders to positive sentiment during London trading session. Risk sentiment swings back to negative to push the Kiwi back down during the US session on the pandemic outlook and more headlines of rising US-China tensions.
NZ dollar falls after RBNZ leaves negative rates on the table – this was pretty much the knockout punch to Kiwi bulls for the week as NZD was unable to recover thanks to negative risk sentiment and more negative NZ data.
RBNZ doubles asset purchasing program
Reserve Bank hikes bond buying to $60 billion, expects mortgage rates to fall
Risk-on sentiment during London session on lockdown easing had the Kiwi bumping slightly higher against the major currencies, but it was a quick flip to risk-off sentiment during Fed Chair Powell’s warning of extended economic weakness.
Risk-off sentiment picked up during the Friday session to sink the Kiwi into the weekend, likely on a combination of weak economic updates from China, Germany, and the U.S., as well as on negative vibes on U.S.-China relations. (Trump administration moves to cut Huawei off from global chip suppliers)