Currency Analysis Report 5/14/20 - Will The Kiwi Decline In The Further Based On Potential Negative Rates???
A couple of weeks ago, New Zealand decided to reduce lockdown conditions from an alert level four to an alert level three, which will allow certain sectors to reopen.
People must work from home if they can. Where that is not possible businesses may re-open but must comply with health and safety requirements around physical distancing and contactless engagement with customers.
Funerals and weddings will be able to go ahead, but limited to 10 people. But they can only be services. No meals, food or receptions can take place.
But by no means does this mean the New Zealand economy will have a “V” shape recover. New Zealand appears to be on the same trajectory as the US. But there does seem to be stark difference between the US and New Zealand.
According to Johns Hopkins University, New Zealand has less than 25 deaths and less than 1200 people infected by COVID-19. This compares to 1.44 million people infected with COVID-19 and a little less than 85,000 deaths in the US.
So why am I comparing New Zealand to the United States, simply to give people a contrast. While the US isn’t calling any of these stimulus programs QE, New Zealand makes no bones about their QE program.
New Zealand's central bank on Wednesday doubled the amount of bonds it will buy as part of its quantitative easing programme and flagged a possible shift to negative interest rates as the COVID-19 pandemic wreaks havoc on the economy.
The Reserve Bank of New Zealand (RBNZ) left its official cash rate (OCR) at 0.25%, as expected, but said it was prepared to use additional tools "if and when needed" including further cuts and expanding its quantitative easing programme to include foreign assets.
So why am I comparing New Zealand to the United States, because RBNZ Governor Adrian Orr told reporters they will assess the use of negative interest rates along with other tools, while Fed Powell want nothing to do with negative interests rates?
So where is the Kiwi headed next, lets go to the charts?
Monthly Chart (Curve Time Frame) - monthly supply is 0.7600 and monthly demand is 0.5500.
Weekly Chart (Trend Time Frame) – the trend is down.
Daily Chart (Entry Time Frame) – the chart suggests to wait for price to breakout of the range.
This post is my personal opinion. I’m not a financial advisor, this isn't financial advice. Do your own research before making investment decisions.
Posted Using LeoFinance
