RBNZ is to announce to its interest rate tonight at 20:00 (GMT) and is expected to remain on hold at +1.75%. The market has priced in the probability to remain on hold at 99.88% and the financial data also support the case as the inflation is currently at +1.6%, below RBNZ’s target range of 2-3%. Focus should shift to the accompanying statement and specifically to the inflation rate which has recently dropped. Another point to keep a look out for, would be the recent strengthening of the NZD. Overall, the statement could have a positive economic outlook, however due to the factors mentioned before we see the case for a cautious comment about the future rate hike path. NZD could weaken as the statement could be neutral to dovish.
NZD/USD yesterday, regained any losses it suffered due to the US stock market mini crash and continued to trade in a sideways manner staying between the 0.7370 resistance level and the 0.7250 support level. We see the case for the pair to continue in a sideways manner with a bearish tone in the short term as the fundamentals suggest. Should the bulls take the driver’s seat we could see the pair breaking the 0.7370 resistance line and aim for the 0.7417 resistance hurdle. On the other hand should the bears have the upper hand we could see the pair breaking the 0.7250 support level and aim for the 0.7180 support barrier.