By The New Zealand dollar is in negative territory for a fourth straight day. fell as low as 0.5803 in the Asian session, its lowest level since March 2020.
Putin Threats, Fed Hikes Weigh On Kiwi
The New Zealand dollar is in serious trouble. NZD/USD has slipped 2.2% this week, and September has been dreadful, with the kiwi declining by 4.3%. The New Zealand dollar is staggering from the double blow of an aggressive Federal Reserve and risk sentiment sliding due to ominous developments in Russia.
Ukraine’s counter-offensive has sent Russian forces in retreat, and a furious Vladimir Putin has upped the ante. He has given the go-ahead for a lightning-fast referendum in occupied Ukraine, in order to annex these territories. As well, Putin has said all options are on the table to defend “Russian territory” and has hinted at the use of nuclear weapons. Second, Putin has ordered a partial mobilization, which could involve up to 300,000 Russian soldiers. These moves are a clear escalation in the conflict and predictably, risk appetite has decreased, sending the risk-sensitive New Zealand dollar lower.
With the Federal Reserve and a host of other central banks tightening policy this week, the spectre of a global recession looms ever closer. This has unnerved investors, who are flocking to the safety of the U.S. dollar and other safe-haven assets. The Fed raised rates by 0.75% on Wednesday in a move that was widely expected. Still, the Fed’s hike can be considered hawkish, as it sent a clear message that it will be uncompromising in the fight against inflation, even if that results in the U.S. economy tipping into a recession. The markets are expecting another 0.75% rate hike in October, and with relations between Moscow and the West worsening, the outlook for risk currencies like the New Zealand dollar look grim.
NZD/USD Technical
NZD/USD tested support at 0.5810 earlier. Below, there is support at 0.5679
There is resistance at 0.5900 and 0.5992
This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
Originally Published Here -Source link
