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Abstract:The NZD/USD dropped through support as the Reserve Bank of New Zealand unexpectedly delivered a 50-basis point rate cut from 1.50% to 1.00% amidst heightened uncertainty over trade.
NZD/USD, RBNZ Talking Points
New Zealand Dollar tumbles as RBNZ delivers surprise 50bps cut
Another 25bps cut this year could lead to further NZD depreciation
NZD/USD is looking to take out key support, eyeing 2016 lows?
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NZD/USD Sinks as RBNZ Delivers 50bps Cut
The New Zealand Dollar tumbled after the RBNZ unexpectedly delivered a more-aggressive interest rate cut. In August, the Reserve Bank of New Zealand lowered its official cash rate to 1.00% from 1.50%, or in other words a 50-basis point cut. This caught markets off guard as expectations of a 25bps cut were the prominent bet.
For the New Zealand Dollar, attention turns to if the central bank might cut rates by an additional 25 basis points to 0.75%. Their monetary policy statement indicated that there is a chance that this might happen. Expect more Kiwi Dollar weakness if trade tensions worsen. Domestically, if economic data trends follow yesterdays upbeat jobs report, that may bode well for the NZD.
In the near-term, the NZD/USD will be closely eyeing the upcoming press conference from RBNZ Governor Adrian Orr. Odds of a further 25bps rate cut are about 50% according to overnight index swaps. If he errs on the side of caution and underpins the focus on data-dependency, this may offset recent selling pressure in the New Zealand Dollar.
NZDUSD Technical Analysis, IG Client Sentiment
The NZD/USD, after the RBNZ, is aiming to resume the near-term downtrend from the end of July. Support, which is a range between 0.6482 and 0.6501, is on the verge of being taken out. Prices are now eyeing October 2018 lows which if taken out, exposes the next psychological barrier between 0.6348 and 0.6403.
This is accompanied by bearish-contrarian price signals that IG Client Positioning is showing on the New Zealand Dollar. If net-long positioning continues to rise, this may exacerbate declines in NZD/USD. Join me every week on Wednesdays at 00:00 GMT as I discuss how you can use this in your own trading strategy.
NZDUSD Daily Chart
Disclaimer:
The views in this article only represent the author's personal views, and do not constitute investment advice on this platform. This platform does not guarantee the accuracy, completeness and timeliness of the information in the article, and will not be liable for any loss caused by the use of or reliance on the information in the article.
In March, Canada's consumer price index increased by 0.6% compared to the previous month, surpassing the 0.3% growth seen earlier. In April, the Reserve Bank of New Zealand opted to maintain its official cash rate at 5.5 percent for the sixth consecutive meeting, emphasizing the ongoing need to address inflation fully. In March, the UK Consumer Price Index registered a slower-than-anticipated increase, reaching 3.2% in annual terms, down from the 3.4% rise observed in February. In March, UK...
The New Zealand central bank maintain its benchmark interest rate at 5.50% as expected during its previous meeting. While there was no surprise of the central bank paused rates, the less hawkish tone was a surprise as 23% of the market surveyed by Reuters predicted an interest rate hike. In February, the rate of consumer price growth in the United States picked up pace with the reading came in at 3.2%, surpassing expectations of 3.1% for underlying inflation.
APAC traders look to close the week out on a bright note following Wall Street rebound. RBNZ rate hike bets continue to strengthen as economy recovers from Covid lockdowns. And, NZD/USD clings to 100-day Simple Moving Average (SMA) after overnight drop.
The Reserve Bank of New Zealand (RBNZ) announced on Wednesday, September 25, 2019 its decision to maintain the current official cash rate, clearly showing a hawkish attitude in its public remarks. The short-term price of NZD to USD climbed over 40 pips to a weekly new height of 0.6347.