Sunday, November 1

NZD/USD bulls capped into early Asia a risk sentiment drops

  • NZD/USD bulls losing their grip due to risk-off tones elsewhere and RBNZ dovishness.
  • RBNZ preparing for negative rates was “not a bluff” and that banks are ready for it’.

NZD/USD is entering early Asia following a bid despite the lack of risk appetite on Wall Street.

At the time of writing, NZD/USD is trading at 0.6656 between a range of 0.6643 and 0.6682.

All three major benchmarks were reeling on Wednesday due to the lack of traction on a new fiscal stimulus package and the relentless spread of coronavirus.

Treasury Secretary Steven Mnuchin made comments that a deal would not likely be made before the vote.

The statement has added to fragile sentiment as the market’s concerns for the spread of virus have ramped up this week.

“At this point getting something done before the election and executing on that would be difficult, just given where we are and the level of detail, but we’re going to try to continue to work through these issues,” Mnuchin said at a conference sponsored by the Milken Institute.

Meanwhile, Germany’s Angel Merkel has crossed the wires confirming the spread of the coronavirus, stating, ”We are in a serious stage of coronavirus pandemic.”

Domestically, ”we got another slew of uber-dovish RBNZ comments yesterday reinforcing the ‘go hard, go early’ message, alongside the comment that preparing for negative rates was “not a bluff” and that banks are ready for it”, analysts at ANZ bank explained.

”All of that helps further colour the negative backdrop, but with plenty of easing already priced in here, the FLP being viewed by the market as a potential reason for the RBNZ to slow the easing timetable, and US election polls shifting, upside risks look to have the upper hand.”

NZD/USD levels

Credit: FX Street

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