The New Zealand Dollar has extended losses after the Reserve Bank of New Zealand (RBNZ) kept rates steady at 1.75% yesterday. The accompanying RBNZ statement was dovish with suggestions that Kiwi interest rates will remain at record lows for “some time to come” and pointing out risks to both domestic and global economies. In May, RBNZ governor Adrian Orr left the door open to a rate cut by saying “the direction of our next move is equally balanced up or down, only time and events will tell”. This puts the RBNZ out of step with the Federal Reserve and the monitory policy differential will continue to put pressure on NZDUSD.
On the daily chart, NZDUSD has declined to support at 0.6780 and break should see a continuation to the 61.8% Fibonacci expansion at 0.6720.Further downside support can be expected at 0.6670 and the psychologically important 0.6600. A reversal above 0.6920 is needed to change the bearish outlook with resistance at 0.6820.
The Canadian Dollar (CAD) has been one of the stronger currencies of late so the NZDCAD pair may provide a short trading opportunity. In the 4-hourly time frame, NZDCAD has broken though 0.9030 and is trending to supports at 0.8970 and then 0.8910. Any pullback to 0.9030 is likely to be met with selling pressure. Only a sustained recovery back above 0.9030 changes the bearish scenario.