Home Forex News NZD/USD Trying To Rally From 1-Week Lows

NZD/USD Trying To Rally From 1-Week Lows

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  • Risk Aversion Chatter
  • Negative Interest rate Talk
  • NZD/USD Outlook

NZDUSD pair remained upbeat in Friday session, recouping some of the losses accrued on Thursday as risk eversion took a toll of sentiments in the market. The dollar rebounded against other major currencies, as fears of a second wave of coronavirus infections, sent traders scampering for safety in Safe-Havens.

NZD/USD Sell-Off

A strengthened dollar sent the NZD/USD to one-week lows with the pair shedding more than 0.5% in value. The sell-off came at the backdrop of an overstretched New Zeeland Dollar that has registered substantial gains against the dollar in recent trading sessions.

New Zealand Dollar has continued to strengthen across the board even on the Reserve Bank of New Zealand, rattling the market with talk about potential negative interest rates. The central bank is reportedly considering negative interest rates to revitalize an economy that is trying to bounce back from the shocks of the COVID-19 pandemic.

New Zealand is one of the few countries to have brought the coronavirus pandemic under control, with few cases of infections and deaths reported in the recent past. However, the economy is yet to bounce back to pre-corona virus levels, a development that continues to weigh down, and the NZD strength in the forex market.

NZD/USD Outlook

Even as the threat of coronavirus continues to fade away in New Zealand, the same cannot be said about the U.S. The U.S is staring at a second wave of infection, a development that has rattled the markets sending traders to safe-havens such as the dollar.

A strengthened dollar across the board is the immediate catalysts pushing the NZD/USD exchange rate lower. The dollar tends to strengthen in times of crisis such as example, the COVID-19 pandemic should see the pair edge lower, especially on infections showing no signs of slowing down after rising past the 2 million mark.

However, Improving New Zeeland economic data should help curtail significant weakness on the NZ dollar against the greenback. The country’s seasonally adjusted PMI was up in May to 39.7 from 26.1 in April.

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