NZD/USD consolidates daily gains near 0.6100 as focus shifts to RBNZ
- NZD/USD struggles to preserve its bullish momentum on Tuesday.
- Investors are waiting for RBNZ's monetary policy announcements.
- US Dollar Index looks to finish day in red below 100.
The risk-sensitive kiwi took advantage of the upbeat market mood during the first half of the day and the NZD/USD pair rose to a daily high of 0.6123. With the USD finding demand in the late American session, the pair lost its momentum and returned to 0.6100 area, where it was still up 0.3% on a daily basis.
On Monday, Chicago Fed President Evans said negative interest rates were unlikely to be used as a tool in the US. On the same note, Dallas Fed President Kaplan argued that negative interest rates' damage would outweigh the benefits. Additionally, Minneapolis Fed President Kashkari acknowledged that FOMC policymakers were "pretty unanimous" in their opposition against negative rates.
The US Dollar Index, which fell to a daily low of 99.66, staged a rebound on these comments and rose toward 100 to force the pair to reverse its direction.
In the early trading hours of the Asian session, the Reserve Bank of New Zealand (RBNZ) will announce the monetary policy decisions.
Previewing this event, "an expansion of QE to $60bn would be no great surprise to markets and would cause only a small market reaction,” said Westpac analysts. “In our preferred scenario of the RBNZ giving a ‘soft’ indication that it intends to keep the OCR at 0.25% until March 2021, but that it remains open to a cut after that, markets would move little.”
Technical levels to watch for