25.06.202017:41 Forex-elemzések és áttekintések: NZD/USD. RBNZ vs New Zealander: "kiwi" purchases are still a priority

The Reserve Bank of New Zealand at its last meeting, which was held yesterday, June 24, tried to reduce the exchange rate of the national currency. In part, it succeeded: the New Zealand dollar reacted negatively to the "dovish" rhetoric of the RBNZ, and in pair with the US currency weakened by almost 100 points, falling to the base of the 64th figure. But with that, the southern momentum faded. The NZD/USD pair could not even update the weekly low (0.6375), although all the prerequisites, at first glance, were for this: the Central Bank of New Zealand ignored the positive signals from the macroeconomic reports and threatened further easing of monetary policy.

It is worth noting that the RBNZ is one of those Central Banks where communication is "lame" – it is quite capable of surprising market participants with its unexpected decision or rhetoric. For example, last summer, the New Zealand regulator thoroughly shook up the markets by lowering the interest rate by 50 basis points without any warning. At that time, the financial world was feeling the effects of the trade war between the United States and China. By the way, the Central Bank of New Zealand was the first among the Central Banks of key countries of the world, which decided to ease monetary policy – it was then followed by the Fed, ECB, RBA, and some other regulators. Then the head of the New Zealand Central Bank, Adrian Orr, said that New Zealand may have to deal with negative rates – in the event of a crisis, the regulator can reduce the key interest rate to -0.35%.

The crisis came, however, the rate remained above zero – in March, the Central Bank lowered it by 75 basis points, bringing it as close as possible to zero (since then, the rate has been at 0.25%). At the same time, the RBNZ at its May meeting, firstly, increased the volume of quantitative easing from 33 to 60 billion, and secondly, did not rule out the introduction of negative rates in the foreseeable future. Commenting on the decisions made, Orr said that the rate can only be revised downward, while the Central Bank does not plan to tighten monetary policy for (at least) the next 12 months. He also did not rule out further expansion of QE "if necessary".

Orr voiced similar rhetoric at the June meeting. However, this time his words sounded more "smoothed", without mentioning the option of negative rates. But the head of the Central Bank said that the Central Bank will regularly review the asset purchase program. He also repeated the standard phrase that the Central Bank is ready to use "additional monetary policy tools". Adrian Orr did not focus on the positive trends in the country's economy, for an understandable reason: he is not satisfied with the current exchange rate of the New Zealand dollar. According to him, the growth of the exchange rate has put additional pressure on the profit from exports, while the balance of risks for the economy remains downward.

Traders could not ignore such soft rhetoric, after which the New Zealander in the greenback pair suspended its growth. The pair NZD/USD rolled back to the level of 0.6402, however, the bears could not organize a break into the area of the 63rd figure. For several reasons. First, the "dovish" theses from Adrian Orr were quite predictable – many experts warned that the Central Bank would exert verbal pressure on the national currency. Second, recent macroeconomic reports indicate that the island nation's economy is gradually but surely recovering. For example, the index of business activity in the manufacturing sector rose in June to almost 40 points after a record may decline to 26 points. In the services sector, the PMI index also showed good dynamics, remaining above the key 50-point level. The above releases have not yet fully reflected the restart of the economy. Third, the last two GTD auctions closed "in the black", reflecting the growth of the price index for dairy products. Fourth, New Zealand has almost completely got rid of the coronavirus (now there are only 10 infected people per 5 million population), which suggests that the economy will recover in the second half of the year.

All these factors slowed down the southern momentum of the NZD/USD, after which the pair began to attract the attention of buyers. In turn, the US currency can not pull the "kiwi" down on its own: the US dollar index is still fluctuating in a flat, so we can not talk about any "dollar rally" now. The greenback showed its strengthening in the first half of the day against the background of another surge in anti-risk sentiment: traders were scared by the anti-record, which was recorded in the United States. The daily increase there exceeded the April figures (more than 35 thousand infected in 24 hours). This fact provoked panic about the fact that the country will again be closed for quarantine. But White House economic adviser Larry Kudlow today repeated the previously voiced thesis that Washington does not plan to introduce restrictive measures nationwide. He allowed the introduction of restrictions "in certain places", but excluded a general lockdown. This fact eased concerns about the increase in the number of infected people, after which the demand for the dollar decreased.

Thus, the New Zealand dollar at the end of the June meeting of the RBNZ maintained its attractiveness, despite the "dovish" remarks of the head of the regulator. At the moment, the NZD/USD pair is just below the average line of the Bollinger Bands indicator on the daily chart (0.6450) – as soon as buyers are fixed above this target, long positions can be considered. The main goal of the upward movement is the mark of 0.6590 – this is the upper line of the Bollinger Bands indicator on the daily chart.