AUD/NZD eyes 1.0400, ahead of the RBNZ Monetary Policy Statement
|- In the last week, most analysts expected a rate hike of 25 bps.
- Single covid-19 case in Auckland, New Zealand weighs on the NZD.
- NZD slides against all of the G7 currencies.
Later, in the day by 02:00 GMT, the Reserve Bank of New Zealand, also known as RBNZ, will unveil its Monetary Policy Statement. In the last week, the majority of the market priced in a 25 bps hike in the Overnight Cash Rate, while the most optimistic, the minority, were looking for a 50 bps hike.
However, conditions have changed. Yesterday, early in the Asian session, when the news of a case of covid in New Zealand hit the wires. The market’s reaction to this was to dump the New Zealand dollar against most of the G7 currencies. (Table 1)
The reaction of the market could be attributed to the rapid spread of the Delta variant, and the slow vaccination rate in the country of barely 19% of the population. Now the market is reassessing if the RBNZ is going to hold or if they stick with the 25 bps hike.
AUD/NZD Technical outlook
The price trades at 1.0440. The moving averages remain well above the spot price with the 50-day moving average at 1.0626, while the 200 and the 100-DMA’’s hover around the 1.0685/95 range. The pair remains in a downtrend and flattish awaiting RBNZ’s decision.
RSI is at 38.69 rising, while the Average True Range (ATR) is 58 pips and heading lower.
Resistance: 1.0540 (August 16 high), 1.0607 (July 28 high), 0.0626.
Support: 1.0450, 1.0418 (2021 low), 1.0350.
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