RBNZ kept it’s interest rate unchanged at 1.75% as was widely expected by the market. The accompanying statement had a rather dovish tone. Specifically, the monetary policy is to remain accommodating for a considerable time and inflation rate to reach 2% in 2020. Also, it was commented that the NZD rise was largely due to US Dollar move. Later on RBNZ Governor stated that he is quite comfortable with current NZD position and not concerned about it. Overall, we see the case for the outlook to weaken the NZD, as possible future rate hikes have been “pushed” further into the future.
NZD/USD started the day in a sideways manner yesterday and dropped later on and during today’s Asian morning, as forecasted yesterday, breaking the 0.7250 support level, now turned to resistance. We see the case for the pair to continue to drop for a short while and stabilize later on. Should there be further selling orders, we could see the pair breaking the 0.7180 support level and aim for the 0.7417 support barrier. On the other hand should the pair find fresh buying orders we could see it breaking the 0.7250 resistance line and aim for the 0.7370 resistance hurdle.