NZD/USD: Trimming losses on New Zealand Treasury's comments that QE is less appealing

NZD/USD jumps 20 pips on comments by New Zealand's Treasury that QE is less appealing.
Treasury feels RBNZ could cut rates to the negative territory if required.

Omkar Godbole FXStreet Contributor

NZD/USD is recovering lost ground on comments by New Zealand's Treasury that asset purchases or quantitative easing (QE) are a less appealing tool of monetary easing.

The currency pair is currently trading at 0.6460, having hit a low of 0.6438 ten minutes before press time.

The Reserve Bank of New Zealand (RBNZ) delivered a better-than-expected 50 basis point rate cut earlier this month and left the doors open for further easing, triggering speculation that the central bank could hit the zero lower bound in the near future and start unconventional measures like the QE.

New Zealand's Treasury, however, was out on the wires about 15 minutes ago stating that it is not very keen on potential RBNZ QE.

That like put a bid under the NZD, helping the pair rise more than 20 pips to 0.6460. The pair, however, is still down 0.10% on the day.

While New Zealand's treasury said that QE is less appealing, it added that the central bank may cut rates to -0.35%, if required. As a result, the bounce seen in the last few minutes could be short-lived.

Pivot levels

1. R3 0.6533
2. R2 0.6517
3. R1 0.6493
PP 0.6477
1. S1 0.6453
2. S2 0.6437
3. S3 0.6413

Author

Omkar Godbole

FXStreet Contributor

Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.

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