NZD/USD: Off multi-year low around 0.5950 amid risk reset
- NZD/USD consolidates losses from the fresh low since May 2009.
- The US Fed announced more measures to ward off coronavirus as all 50 states and DC become the victim.
- New Zealand Current Account Deficit came in better than anticipated.
While the US policymakers’ fight against the pandemic propelled the greenback the previous day, the US dollar bulls seem to catch a breath following news of the wide outbreak of coronavirus (COVID-19) in the nation. That said, the NZD/USD pair retraces losses from the multi-year low to 0.5950 by the press time of early Asian session on Wednesday.
The Kiwi pair recently benefited from the news that the deadly virus is now present in all 50 states of the US and the DC. Also weakening the greenback could be the comments from US Treasury Secretary Steve Mnuchin who cited fears of witnessing 20% Unemployment Rate in a case of inaction. While identifying the threat, the US Federal Reserve undertook another action to combat the disease by offering short-term credit lines to primary dealers.
On the economic front, New Zealand Current Account for the fourth quarter (Q4) shrank less than $-2,956B expected to $-2657B over QOQ while the ratio of Current Account to GDP recovered from -3.1% forecast to -3.0%.
With this, the market’s risk-tone took another jibe with the S&P 500 Futures declining near 1.5% to 2,450 by the press time.
The US policymakers, including the government as well as the Fed, announced multiple measures on Tuesday to fight against the nation’s struggle during the coronavirus outbreak.
Elsewhere, the New Zealand government also announced a heavy package, 4.0% of the GDP, to ward off the negative implications of the pandemic. However, signals that it was only phase one of the announcements made kiwi traders worried. “We are now at a new low for the cycle, and with large-scale QE inevitable in coming weeks and the US gearing up for more fiscal stimulus, we expect the Kiwi to be under the gravitational pull,” said Australia and New Zealand Banking Group (ANZ).
Traders will now take clues from the global policymakers’ moves to tame the negative implication of the deadly virus. However, data from the US could offer intermediate moves as well.
Technical Analysis
There is no stop to the pair’s declines towards early-May 2009 tops near 0.5770 if the quote remains under 0.6200.