The Reserve Bank of New Zealand (RBNZ) is widely expected to keep the OCR (Official Cash Rate) at the current record low 1.50%, when they announce their decision at 02:00 GMT on Wednesday. The OCR is the means by which the RBNZ manages monetary policy for the New Zealand economy, by lending overnight cash at 25 basis points above the OCR, and receiving deposits and paying interest at 25 basis points below the OCR.
The cut at their last meeting (May 8) was also widely anticipated, following the increase in “easing bias” from Governor Orr and other members of the RBNZ board that had been gaining momentum for a number of months. New Zealand is an export-driven economy with commodities (particularly soft commodities) accounting for 40% of all exports, with key neighbours Australia and China being vital markets. This puts increased emphasis on a competitive exchange rate.
Following a prolonged move down, the NZDUSD bounced from a double bottom low at 0.6490 after last week’s announcement from the FOMC. The move has stalled, ahead of the RBNZ, at the 38.2 Fibonacci level and key round number at 0.6550. A breach of the June high at 0.6680 could see further moves to the 50.0 Fibonacci and 200-day Moving Average resistance zone at 0.6700-20. Support sits at the 50-day moving average and psychological 0.6600 and 0.6500.
Click here to access the Economic Calendar
Head Market Analyst
Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.