Forex Market: NZD/USD hits a fresh 13 1/2-month high after a speech by RBNZ Governor Adrian Orr

NZD/USD extended gains from the prior trading day and touched a fresh 13 1/2-month high on Wednesday, after Reserve Bank of New Zealand Governor Adrian Orr said the central bank’s actions had been effective in broadly reducing interest rates.

“We have been effective in lowering interest rates across the board, and ensuring there is plentiful liquidity in the financial system,” RBNZ Governor said in a speech at the Victoria University School of Government and Policy Studies earlier on Wednesday.

Orr also said the central bank was ready to use additional monetary policy tools if required, including negative interest rates, direct lending to banks or additional quantitative easing.

Meanwhile, the US Dollar rebounded from yesterday’s 28-month low against six major peers, after the latest data from the Institute for Supply Management showed US manufacturing activity had expanded at the sharpest rate since November 2018 in August, as new orders rose to their highest level since December 2017.

Additional support for the dollar came after White House chief of staff Mark Meadows said that Senate Republicans would likely bring up a targeted coronavirus relief bill during the upcoming week.

As of 6:52 GMT on Wednesday NZD/USD was edging up 0.18% to trade at 0.6769, after earlier touching an intraday high at 0.6789, or a level not seen since July 19th 2019 (0.6791). The major pair rose 1.63% in August, while marking its fifth straight month of gains.

In terms of economic calendar, a report by Automatic Data Processing Inc at 12:15 GMT may show employers in the US non-farm private sector hired 900,000 employees in August, as expected by analysts. In July, private businesses hired only 167,000 workers, as COVID-19 resurgence forced several states to scale back or pause their reopening plans and some workers were sent back to unemployment.

At 14:00 GMT Federal Reserve President for New York John Williams is to take part in a conversation titled “New York Fed Presidents on COVID-19”, hosted by the Bretton Woods Committee.

At 16:00 GMT Federal Reserve President for Cleveland Loretta Mester is expected to speak on the US economic outlook and monetary policy before the 17th Annual NABE Foundation Economic Measurement Seminar via webcast.

And at 18:00 GMT Fed President for Minneapolis Neel Kashkari is to take part in a virtual panel with a topic “Where are the Black Financial Regulators?”, hosted by the Brookings Institution.

Bond Yield Spread

The spread between 1-year New Zealand and 1-year US bond yields, which reflects the flow of funds in a short term, equaled 7.7 basis points (0.077%) as of 6:15 GMT on Wednesday, up from 7.4 basis points on September 1st.

Daily Pivot Levels (traditional method of calculation)

Central Pivot – 0.6754
R1 – 0.6782
R2 – 0.6806
R3 – 0.6834
R4 – 0.6861

S1 – 0.6730
S2 – 0.6702
S3 – 0.6677
S4 – 0.6653