NZD/USD Rebound Vulnerable to Dovish RBNZ Forward Guidance

Trading a News: Reserve Bank of New Zealand (RBNZ) Interest Rate Decision

The Reserve Bank of New Zealand (RBNZ) assembly might do small to boost a seductiveness of a New Zealand dollar as a executive bank is widely approaching to keep a executive money rate (OCR) during a record-low of 1.75% in August.

Image of DailyFX mercantile calendar

The RBNZ might continue to validate a wait-and-see proceed for financial process as ‘the new weaker GDP outturn implies marginally some-more gangling ability in the economy than we anticipated,’ and Governor Adrian Orr Co. might continue to tame expectations for aloft seductiveness rates as officials disagree that ‘the best grant we can make to maximising tolerable employment, and progressing low and fast inflation, is to safeguard a OCR is during an expansionary spin for a substantial period.’ In turn, some-more of a same from a RBNZ might furnish a bearish greeting in NZD/USD generally as a Federal Reserve stays on march to serve normalize financial policy.

However, like a Reserve Bank of Australia (RBA), an astonishing change in a RBNZ’s forward-guidance for financial process should worsen a seductiveness of a New Zealand dollar, with a collection of hawkish tongue expected to fuel a new miscarry in NZD/USD as it encourages bets for aloft seductiveness rates. Sign adult and join DailyFX Currency Strategist Ilya Spivak LIVE for a broader contention on stream themes and intensity trade setups!

Impact that a RBNZ rate preference has had on NZD/USD during a prior meeting

June 2018Reserve Bank of New Zealand (RBNZ)

NZD/USD 10-Minute Chart

Image of NZDUSD 10 notation chart

To no surprise, a Reserve Bank of New Zealand (RBNZ) kept a executive money rate (OCR) during a record-low of 1.75% in June, with a executive bank observant that it is ‘well positioned to conduct change in possibly direction – adult or down – as necessary.’ The executive bank went onto contend that a ‘he new weaker GDP outturn implies marginally some-more gangling ability in the economy than we anticipated,’ and it seems as yet Governor Adrian Orr Co. will hang to a sidelines over a entrance months as officials note that ‘the best grant we can make to maximising tolerable employment, and progressing low and fast inflation, is to safeguard a OCR is during an expansionary spin for a substantial period.

Despite a singular greeting to a RBNZ, NZD/USD struggled to reason a belligerent following a meeting, with a sell rate slipping behind next a 0.6800 hoop to finish a day during 0.6757. Learn some-more with a DailyFX Advanced Guide for Trading a News.

NZD/USD Daily Chart

Please supplement a outline for a image.

  • Keep in mind, a broader change in NZD/USD function appears to be holding figure as both cost and a Relative Strength Index (RSI) bluster a bearish formations from progressing this year, and a miscarry from a 2018-low (0.6688) might accumulate gait once a sell rate breaks out of a range-bound cost movement from progressing this month.
  • The fibre of unsuccessful attempts to break/close next a 0.6710 (61.8% expansion) to 0.6720 (61.8% expansion) region raises a risk for a pierce behind towards 0.6710 (61.8% expansion) to 0.6720 (61.8% expansion, with a near-term opinion capped by a former-support section around 0.6820 (23.6% retracement) to 0.6870 (78.6% expansion).

Additional Trading Resources

New to a banking market? Want a improved bargain of a opposite approaches for trading? Start by downloading and reviewing a DailyFX Beginners Guide!

Are we looking to urge your trade approach? Review a ‘Traits of a Successful Trader array on how to effectively use precedence along with other best practices that any merchant can follow.

— Written by David Song, Currency Analyst

Follow me on Twitter during @DavidJSong.

About author