NZD/USD stays deep in the negative territory little above 0.6900, eyes on RBNZ
- NZD/USD pair is suffering heavy losses on Tuesday.
- US Dollar Index climbs above 93.00 in American session.
- RBNZ will announce its policy decisions on Wednesday.
The NZD/USD pair fell sharply during the Asian trading hours on Tuesday and touched its weakest level in three weeks at 0.6905. With the greenback gathering strength in the second half of the day, the pair is having a difficult time staging a correction and was last seen losing 1.43% on the day at 0.6916.
Focus shifts to RBNZ
The NZD came under strong selling pressure after New Zealand Prime Minister Jacinda Ardern announced a snap three-day nationwide lockdown in light of the community case detected in Auckland. This development could force the Reserve Bank of New Zealand (RBNZ), which will announce its monetary policy decisions on Wednesday, to adopt a cautious tone and delay the tightening.
Previewing the RBNZ event, "we now expect the Reserve Bank to leave the OCR on hold," said Westpac analysts. "Regardless of the economic case for higher interest rates, there is nothing to be gained from pushing the OCR higher now, rather than waiting for more clarity on the covid situation."
RBNZ Preview: Forecasts from nine major banks, odds of rate hike diminish amid fresh covid lockdown.
On the other hand, the greenback is capitalizing on safe-haven flows and causing NZD/USD to stay deep in the negative territory. The US Dollar Index is currently rising 0.53% on the day at 93.10.
Earlier in the day, the data from the US showed that Retail Sales declined by 1.1% in July. On a positive note, the US Federal Reserve reported that Industrial Production expanded by 0.9% in the same period. Later in the session, FOMC Chairman Jerome Powell will host a virtual event with educators and students.
Technical levels to watch for