2020.08.1207:19:00UTC+00NZ Dollar Falls As RBNZ Boosts QE

The NZ dollar lost ground against its major counterparts in the Asian session on Wednesday, after the Reserve Bank of New Zealand kept its benchmark interest rate unchanged and expanded the asset purchase programme unexpectedly, citing concerns about the economic disruption caused by the pandemic.

The Monetary Policy Committee of the Reserve Bank of New Zealand decided to expand the Large Scale Asset Purchase programme up to NZ$100 billion and also agreed that a package of additional monetary instruments must remain in active preparation.

Additional stimulus could include a negative rate, the direct funding of retail bank lending and purchases of foreign assets.

The central bank retained its key interest rate at 0.25 percent.

Asian stock markets are mostly lower following the negative cues from Wall Street as optimism generated by news that Russia has approved a vaccine for COVID-19 was offset by the stalemate in U.S. fiscal stimulus talks.

The kiwi weakened to 0.6524 against the greenback, its lowest level since July 14. The kiwi is poised to find support around the 0.645 region.

The NZD/JPY pair reached as low as 69.60, setting nearly a 2-week low. On the downside, 68.00 is seen as the next likely support for the kiwi.

The kiwi dipped to a 2-1/2-month low of 1.7969 versus the European currency, compared to Tuesday's closing value of 1.7848. The kiwi is seen finding support around the 1.82 level.

The kiwi fell to 1.0922 against the aussie, a level unseen since October 2018. The kiwi may test support around the 1.12 region, if it falls again.

Data from the Australian Bureau of Statistics showed that Australia wage prices rose 1.8 percent on year in the second quarter of 2020.

That was shy of expectations for 1.9 percent and down from 2.1 percent in the three months prior.

Looking ahead, Eurozone industrial production for June is due in the European session.

U.S. CPI and monthly budget statement for July are scheduled for release in the New York session.