AUD/NZD dips below 1.09 despite dovish comments by RBNZ's Orr

• AUD/NZD drops more than 25 pips after RBNZ's Orr talked dovish. 
• Orr signaled readiness to expand stimulus, left the door open for negative rates.

The Reserve Bank of New Zealand's governor Orr said Wednesday that the central bank is ready to deliver more stimulus. Even so, the NZD picked up a bid, pushing the AUD/NZD cross below 1.09. 

Open to further QE, negative rates

"The central bank is actively preparing a package of additional monetary policy tools to use if needed," Orr said on Wednesday. Or added that, "options include negative wholesale interest rates, further QE [a bigger asset purchase program], direct lending to banks, and ongoing forward guidance about central bank's intentions."

The central bank is also open to purchasing foreign assets under the QE program, Orr said. 

Such comments usually weaken domestic currency. However, the New Zealand dollar gained ground on Orr's dovish talk. The AUD/NZD cross fell from 1.0910 to 1.0875 following Orr's comments, which hit the wires at 00:30 GMT and was last seen trading at 1.0882, representing a 0.13% decline on the day. 

It remains to be seen if the unexpected strength in the NZD is maintained during the day ahead. 

The central bank cut rates to a record low of 0.25% and launched a large scale asset purchase program earlier this year to counter the coronavirus-induced recession fears. Last month, the central bank expanded its asset purchases to NZD100 billion of assets, up from NZD 60 billion. 

Technical levels