NZD/USD sticks to RBNZ-led heavy losses to multi-year lows, around 0.6400 handle
- RBNZ unexpectedly delivers a 50bps rate cut and left doors open for further action in the future.
- Dovish RBNZ, coupled with escalating US-China trade tensions aggravated the bearish pressure.
- Highly oversold conditions helped limit further downside amid some renewed USD weakness.
The NZD/USD pair now seems to have entered a bearish consolidation phase and was seen oscillating in a narrow trading band near the 0.6400 handle, digesting the post-RBNZ slump to over 3-1/2 year lows.
Having failed to capitalize on this week's recovery from the 0.6490-80 support area, the pair met with some aggressive selling pressure on Wednesday after the Reserve Bank of New Zealand (RBNZ) unexpectedly delivered a 50 bps rate cut in order to counter the impact of slowing economic growth.
Apart from the larger-than-expected rate cut, the RBNZ Governor Orr kept the doors open for further easing in the near future and said that Wednesday's cut does not rule out further action. Orr added that the central bank may have to do negative rates and further collaborated towards aggravating the bearish pressure.
Meanwhile, bearish traders seemed rather unaffected by some renewed US Dollar selling bias, triggered by a fresh leg of a free-fall in the US Treasury bond yields. In fact, the yield on the benchmark 10-year US government bond fell to its lowest level since Oct. 2016 and was seen affecting negatively on the buck.
Having failed to capitalize on this week's recovery from the 0.6490-80 support area, the pair met with some aggressive selling pressure on Wednesday after the Reserve Bank of New Zealand (RBNZ) unexpectedly delivered a 50 bps rate cut in order to counter the impact of slowing economic growth.
Apart from the larger-than-expected rate cut, the RBNZ Governor Orr kept the doors open for further easing in the near future and said that Wednesday's cut does not rule out further action. Orr added that the central bank may have to do negative rates and further collaborated towards aggravating the bearish pressure.
Meanwhile, bearish traders seemed rather unaffected by some renewed US Dollar selling bias, triggered by a fresh leg of a free-fall in the US Treasury bond yields. In fact, the yield on the benchmark 10-year US government bond fell to its lowest level since Oct. 2016 and was seen affecting negatively on the buck.
Given the recent escalation in the US-China trade disputes, a dovish RBNZoutlook now seems to set the stage for an extension of the pair's well-established bearish trend, albeit extremely overbought conditions might hold investors from placing any aggressive bets and turn out to be the only factor that might help limit further losses.
In absence of any major market-moving economic releases from the US, a scheduled speech by Chicago Fed President Charles Evans will influence the USD price dynamics and collaborate towards producing some short-term trading opportunities later during the early North-American session.
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