The New Zealand dollar has stabilized after sustaining sharp losses earlier in the week. In Thursday’s North American session, NZD/USD is trading at 0.6585, up 0.90% on the day.
Business sector shows improvement
There are no major events out of New Zealand this week, with the data limited to tier-2 events. Still, there was some positive news on Thursday, as business indicators were stronger. The ANZ Business Confidence index, although still in negative territory, moved higher for a fourth successive month. The October read of -14.5 was up from -28.5 beforehand. Back in April, at the height of the Covid-19 outbreak, the index plunged to -66.6, indicating severe pessimism in economic conditions. There was more good news as the ANZ Activity Outlook rebounded with a gain of 3.6% in October, defying the forecast of -14.6 percent. In September, the indicator came in at -5.4%.
RBNZ hints at negative rates
The Reserve Bank of New Zealand has not shied away from announcing that negative interest rates are on the table, although this has weighed on the New Zealand dollar. Investors will be tempted to take their cash elsewhere if faced with negative rates, and NZD/USD lost ground after the September RBNZ policy meeting, when the bank said negative rates was on option. On Wednesday, the RBNZ Assistant Governor again raised the issue of negative rates, and the bank’s chief economist reiterated this dovish stance, stating that that the bank would prefer to provide too much stimulus over too little.
NZD/USD Technical
- NZD/USD faces resistance at 0.6596. Close by, there is resistance at 0.6614
- There is support at 0.6566, followed by a support line at 0.6554
- The 10-day MA earlier remains relevant, just above the pair
