The rates continue within the frames of the downtrend. In March, there was an inkling of a trend reversal: the upward movement was stable and long, but in the end, the reversal did not take place. The New Zealand dollar did not have enough incentives to strengthen, despite shocking and disappointing macroeconomic reports from the US and the leading position of the US in terms of coronavirus cases.
With the onset of the pandemic and the resulting economic crisis, the USD went from a risky asset to a safe one for investors. According to investors, the US retains the potential to stimulate its economy and has a possibility of a rapid recovery, despite the shocking increase in unemployment.
The New Zealand dollar was supported by the recovery of production in China, but due to the fall in commodity prices, it found itself under pressure again. Despite the fact that New Zealand is not an oil exporter, the NZD is among the commodity assets that investors are now selling off as the most unprofitable assets for investment. T
his week, a representative of the RBNZ said that it does not exclude the possibility of introducing a negative rate, although previously a rate cut to 0.25% was announced as the final one for the next 12 months. It is possible that the NZD will receive support next week, with the publication of data on the trade balance and business activity in New Zealand for March. The reports should not be disappointing because food demand remains high despite the pandemic.
We believe that the deals to SELL will remain relevant in the medium term, given that the global economic crisis is just beginning. Most technical analysis tools also indicate the efficiency of short trades.
