NZD/USD bears attack 0.6500 as RBNZ leaves cash rate unchanged, boosts QE

• NZD/USD drops over 40 pips after RBNZ rate decision and Monetary Policy Statement.
• RBNZ keeps benchmark interest rate at 0.25% but expands QE to NZD 100 billion.
• New Zealand policymakers weigh wage subsidy, defer the Parliament’s dissolution to combat virus wave 2.0.
• RBNZ Press Conference awaited for fresh impulse, US CPI will be followed next.

NZD/USD stretches the early-day losses after RBNZ matches the dovish market expectations on early Wednesday. The kiwi pair refreshes the intraday low to 0.6524 before trading around 0.6545, down 0.55% on a day, after the central bank’s action.

Read: Breaking: RBNZ leaves OCR steady at 0.25%, expands QE to NZD100 billion

Earlier during the day, New Zealand Finance Minister Grant Robertson cited that the diplomats are weighing to announce wage subsidy for the Auckland in a case where the recently announced lockdown extends. Following the move, New Zealand’s Prime Minister (PM) Jacinda Ardern crossed wires while defying the dissolution of the Parliament ahead of the much-awaited September election. The updates triggered expectations of a delay in the election.

On the other hand, US President Donald Trump rekindled virus hopes while citing a deal with Moderna. However, the American leader fails to please the buyers amid uncertainty over the coronavirus (COVID-19) relief bill and the US-China tussle. Also troubling the market players were the mixed virus statistics from Australia and the US. Victoria’s new cases and death numbers have started following the American pattern of stabilization.

Amid all these plays, S&P 500 Futures rise 0.15% to 3,335 while stocks in Japan print 0.30% gains that contrast to the same amount of losses by Australia’s ASX 200. At home, New Zealand’s NZX 50

Having witnessed the initial reaction to RBNZ, market players may now keep eyes on the press conference by the policymakers, around 03:00 GMT, for fresh impulse. Given the broad market consensus suggesting further dovish tones from the RBNZ, any positive surprise or even a neutral tone could be detrimental for the NZD/USD bears.

Technical analysis

The pair’s sustained break of an ascending trend line from March, at 0.6600 now, drives the quote further down towards a 50-day SMA level of 0.6544. However, the mid-July bottom near 0.6500 could restrict the pair’s further weakness. On the contrary, a falling trend line from July 31, currently around 0.6670, adds to the upside barriers for the pair beyond the support-turned-resistance line near 0.6600.