NZD/USD drops below 0.69 as RBNZ leaves the door open for additional stimulus

• NZD/USD faces selling pressure after dovish comments by the RBNZ.
• The central bank is committed to providing additional stimulus if required. 
• RBNZ kept rates and the QE program size unchanged, as expected.

The offered tone around the New Zealand dollar strengthened, pushing the NZD/USD pair lower from 69.26 to 68.77 following the Reserve Bank of New Zealand's dovish monetary policy statement. 

Indeed, the Reserve Bank of New Zealand kept rates unchanged at the record low of 0.25% and made no changes to the asset purchase program size (NZD 60 billion), as expected. 

The central bank, however, said that it is prepared to use additional monetary policy tools as needed and committed to reviewing quantum of the asset purchase program. Put simply, the bank stands ready to increase the size of the asset purchases if the offshore coronavirus cases continue to accelerate, causing a deeper slowdown in both the global and the domestic economy. 

In addition, the RBNZ expressed concerns about the strength in the New Zealand dollar. "Rising exchange rate has put further pressure on export earnings," the bank's statement said. The NZD/USD pair has rallied by 59.50 to 71.66 in the 2-1/2 months to June 8. 

At press time, the pair is trading in the end near 68.90. The Kiwi may suffer deeper losses during the day ahead if the global equities come under pressure due to quarter-end rebalancing, as expected by prominent investment banks. 

Technical levels