NZD/USD touched a high which is the level last seen in April 2018. There is a positive sentiment despite the Reserve Bank of New Zealand (RBNZ) expressed willingness to provide more stimulus and stressed its ability to implement negative rates if needed.
The Reserve Bank of New Zealand kept its Official Cash Rate (OCR) steady at 0.25% in its first interest rate decision of the year, as expected. But few were anticipating the RBNZ to shift to a more hawkish stance after a solid few months of rising home prices and inflation data. New Zealand’s economic strength in recent months is largely due to the country’s ability to contain the virus pandemic within its own borders.
While the consensus held around changes to the OCR is that it would be premature to raise rates, some expected a pullback in the size of large scale asset purchases (LSAPs), but it appears the central bank is holding off on doing so for the time being and will keep the size of buying at NZ$100 billion, with a June 2022 target end date.
“The central bank remains committed to providing more stimulus if needed,” said the Reserve Bank of New Zealand (RBNZ) Governor Adrian Orr while speaking at the post-monetary policy decision press conference on Wednesday.
The RBNZ’s Deputy Governor Christian Hawkesby spoke alongside Governor Adrian Or, noting that the bank wants to be a downward influence on the yield curve.
On the other hand, Fed Chair Jerome Powell’s fears of further economic struggle before reaching the inflation and unemployment targets impacts the market sentiment. It should be noted that the US-China and the Washington-Tehran tussles add to the market’s sluggish mood.
Elsewhere, the vaccine news recently announced by AstraZeneca adds to the market optimism. That said, S&P 500 Futures drop 0.20% while the US 10-year Treasury yields decline 2.2 basis points (bps).
NZD/USD 4 Hour Chart:
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