NZD/USD is easing back from yearly highs (0.6789) as the Reserve Bank of New Zealand (RBNZ) considers its next steps to support the economy. The upcoming monetary policy meeting is on 22nd September. With RBNZ Governor Adrian Orr saying “that it is better to risk doing too much too soon, rather than too little too late”, the New Zealand Dollar could encounter selling pressure as the meeting draws into focus.
NZD/USD RBNZ Stimulus Talk Keeps Pressure on Pair
NZD/USD fails to extend the selloff in the previous week, despite the Non-farm payroll report reaction. However recent comments from the New Zealand central bank appear to be dragging on demand for the New Zealand Dollar as the RBNZ is “actively preparing a package of additional monetary policy tools to support the economy if required.”
Governor Orr hinted that the RBNZ will use more unconventional tools, such as negative rates and direct funding to banks for maximum impact.
Governor Orr also affirmed that the central bank remains committed to “clearly communicate our future monetary policy strategies and tools, and when we might use them,” Whether the RBNZ will give a more in depth guidance at the September meeting as it prepares the financial sector for negative rates is so far unknown.
Any further hints towards the shift in policy are likely to weigh on the New Zealand Dollar although NZD/USD may find support from the current trend and US Dollar crowding.