RBNZ’s interest rate decision

On Thursday, early in the Asian session we get RBNZ’s interest rate decision. The bank is widely expected to remain on hold at +1.75% as currently NZD OIS imply a probability for such a scenario of 99.15% so the market’s attention could turn to the accompanying statement. With the inflation rate for Q2 accelerating to +1.5% yoy, unemployment remaining at rather low levels (4.5%) and no new release regarding the GDP growth rate, we could see chances for the bank’s next rate move to be a rate cut being reduced and the uncertainty of the relative remark slowly being removed. Should the bank have a more hawkish tone than in the previous decision we could see the Kiwi strengthening, while should it have a neutral to dovish tone, NZD could weaken or the meeting could pass as a non-event

NZD/USD jumped on today’s Inflation Expectations and moved higher breaking our 0.67584 resistance line and corrected lower later on. Should the bears dictate the pairs’ direction we could see it moving downwards to the 0.66873 support line and even breaking it. On the other hand if a bullish movement overtakes the pair we could see it break the 0.67584 resistance line and aim higher for the 0.67848 resistance barrier.

 

RBNZ remains on hold, NZD weakens

RBNZ remained on hold at +1.75% and market reaction was rather muted upon release as the decision was widely expected. The accompanying statement had a neutral to dovish tone with main elements being the preservation of an accommodating monetary policy, the acknowledgement of increased trade tensions and the comment about a weaker GDP growth rate. Analysts point out, that probabilities for the bank’s next move to be a rate cut have risen, adding to the bearish sentiment. We could see the Kiwi weakening in the aftermath of the decision, given the expansionary monetary policy remaining in place for a considerable period of time.

NZD/USD dropped yesterday and during today’s Asian session breaking the 0.6820 and the 0.6780 support levels. Please be advised the pair has hit one of it’s lowest levels for the past 2 years. Technically, the downward trend line forming since Monday as well as the low RSI reading in the 4 hour chart should not be ignored. We could see the pair continue to drop in the aftermath of the RBNZ decision however could stabilize somewhat in our opinion. Should the bears continue to be in charge, we could see the pair dropping and aiming if not breaking the 0.6725 support line. If the bulls take over, we could see the pair breaking the 0.6780 resistance line and aim for the 0.6820 resistance hurdle.

RBNZ Interest rate decision

RBNZ is expected to announce its interest rate decision today, at 21:00 GMT. RBNZ is widely expected to remain on hold and keep interest rates at +1.75%. Currently, NZD OIS imply a probability for the bank to remain on hold at 99.29%. Market focus could shift to the accompanying statement which given the recent financial data, may keep a neutral tone. Special interest could be allocated to any comments regarding the GDP growth rate as well as, the picking up of the inflation rate and global trading conditions. We could see the Kiwi weakening with the release of the interest rate decision and the market may have started to position itself already.

NZD/USD dropped yesterday breaking the 0.6852 resistance level and during today’s Asian morning tested the 0.6820 support line. We could see the pair continue to trade in a bearish market as the Kiwi may weaken ahead of RBNZ’s interest rate decision. It should be noted that the RSI indicator is currently below the reading of 30 in the 4 hour chart, implying an overcrowded short position for the pair. Should the bears continue to drive the pair, we could see it breaking the 0.6820 support line and aim if not break the 0.6780 support level. Should on the other hand, the bulls take over, we could see it breaking the 0.6852 resistance line.