- NZD/USD drops 0.23% in Asia after failing to break above 0.66 on Thursday.
- Risk-off action in the equity market bodes well for the safe-haven US dollar.
- Fed’s balance sheet size drops below $7 trillion, could add to bearish tone around equities.
The NZD/USD pair is extending overnight losses with the US dollar continuing to draw haven bids amid losses in the equity markets.
Currently, the pair is trading near the 200-hour simple moving average at 0.6517, having printed a session low of 0.6546 soon before press time.
Risk-off
The US stocks dropped on Thursday as the continued spread of coronavirus threatened prospects of V-shaped economic recovery.
Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases said that states of Texas, Florida, and California, where cases are rising at a faster rate, should opt to pause reopening measures and rather go for a complete shutdown.
In addition, oil prices fell sharply, pushing the energy stocks lower and adding to bearish pressures around the broader equity markets.
At press time, the futures tied to the S&P 500 are flatlined, however, stocks in Japan, Australia, and South Korea are flashing red and keeping risk assets under pressure.
The risk aversion may worsen on Friday, fueling deeper losses in NZD/USD, as the Federal Reserve’s balance sheet size is decreasing with the fall in demand for emergency liquidity measures.
Source from https://www.fxstreet.com/news/nzd-usd-dips-below-200-hour-sma-on-risk-aversion-202007100122