NZD/USD stays higher today on the back of a calmer risk mood in markets
The pair is looking to snap a run of ten consecutive daily losses today as the kiwi is holding firmer after the drop following the RBNZ decision to cut its OCR by 50 bps yesterday. The risk mood is helping alleviate some pressure off the pair as the yuan trades higher.
Of note, price closed above the October 2018 low @ 0.6425 yesterday despite having fallen to its weakest level since January 2016 at one point – below the 0.6400 handle.
However, the outlook is still suggestive that the path of least resistance for the kiwi moving forward is for price to head lower.
The RBNZ looks to have gone full-blown dovish with more talks of negative rates and unconventional policies today and quite frankly, I just don’t see the more cheerful risk mood staying the course as US-China trade tensions continue to drag on.
Add to the fact that global central banks are now in a race to the bottom to deal with core issues i.e. weakening economy and slowing inflation, it’s hard to see markets not get spooked off by the prospects of a pseudo-currency war of sorts.
However, with the dollar itself caught in the crossfire of a trade war, perhaps NZD/JPY may present a better opportunity to ride on any kiwi weakness. Especially with price looking to fall off a cliff past key support levels seen in recent years: