NZD/USD renews four-day day high near 0.6480, hawkish RBNZ underpins
- Risk-on gathers steam amid receding China coronavirus fears.
- Safe-haven demand for the US dollar takes a fresh knockdown.
- Hawkish RBNZ keeps the Kiwi supported ahead of Powell speech.
With the risk-on sentiment having picked up pace in the European trading, amid a fall in China’s new coronavirus cases, hit the haven demand for the US dollar across the board and prompted a fresh leg higher in the NZD/USD pair.
The Kiwi popped up from near 0.6450 region and renewed a four-day high at 0.6479 in the last hour. At the press time, the spot trades at 0.6467, still benefiting nearly 1% so far.
The main driver behind the recent strength in the pair is the strong surge in the New Zealand dollar. The Kiwi dollar took flight and jumped 60+-pips against its American counterpart after the Reserve Bank of New Zealand (RBNZ) delivered a surprisingly hawkish shift in its monetary policy statement while maintaining the Official Cash Rate (OCR) at 1.0%.
The RBNZ sounded more confident on the economic outlook and forecasted no rate cut this year in its forward guidance. The central bank also downplayed the negative economic impact of China coronavirus.
Looking ahead, markets await the second round of the testimony from the Fed Chairman Powell due later on Wednesday for fresh dollar trades. In his semiannual testimony before Congress on Tuesday, Powell said the new coronavirus threat comes just as trade uncertainties have diminished, though the US economy appears “resilient” to global headwinds.
NZD/USD Technical levels to watch