NZD higher despite RBNZ cautious tone
February 24, 2021SharePrint
The New Zealand dollar has recorded strong gains in Wednesday trading. Currently, NZD/USD is trading at 0.7379, up 0.61% on the day.
RBNZ says prolonged QE needed
The New Zealand dollar continues to shine, as it beats up on the US dollar. NZD/USD has gained 1.2% so far this week, and is up an impressive 2.8% in February. The pair has again posted strong gains on Wednesday, as even a dovish RBNZ rate statement hasn’t curbed the current upswing.
The RBNZ’s message to the markets on Wednesday was crystal clear. The rate statement saying that monetary support would remain for some time. The bank said that “prolonged monetary stimulus” was needed and that inflation and employment targets would take time to be met. The RBNZ maintained interest rates at 0.25% and its QE programme (LCAP) at NZ100 billion. However, the bank noted that it was prepared to “provide additional monetary stimulus if necessary.” Ne
Following a strong fourth quarter performance across equity markets, the month of January kicked off with a slow start. Despite the procyclical support that is expected to pave the path to an economic recovery, concerns about new virus strains and a sharp short squeeze shaped equity market returns for the month of January.
Broad equity market indices, such as the Eurostoxx 50 and S&P 500, were slightly down since the start of the year. Both indices reversed the early in the month gains, as new covid-19 variants, their impact on vaccine efficacy and renewed lockdowns triggered concerns over a risk of a slowdown in the economic recovery. Moreover, January ended with a sharp short squeeze, driven by a rally in heavily shorted stocks by retail traders. This in turn led short investors to cover their positions and reduce their long positions, leading to technical selling pressure across equity markets.