NZD/USD rallies towards 0.6500 as RBNZ announced 50 bps rate hike
|- NZD/USD takes the bids to refresh intraday high on RBNZ moves.
- RBNZ matches wide market forecasts with a 0.50% rate increase.
- Mixed sentiment, USD rebound tests the Antipodeans amid anxiety ahead of FOMC Minutes.
- RBNZ Press Conference, US Durable Goods Orders and Fedspeak also become important for fresh clues.
NZD/USD rallies over 60 pips as the RBNZ announces 50 basis points (bps) of a rate hike in early Wednesday. In doing so, the quote not only reverses the early-day losses but also pokes the three-week high marked on Monday.
That said, the Reserve Bank of New Zealand (RBNZ) proves right on the market forecasts while announcing an interest rate lift to 2.0%, from 1.5% prior, the third such move in 2022.
It should be observed that risk appetite dwindles as negative headlines from China and South Korea join the cautious mood ahead of the key data/events. While portraying the mood, the S&P 500 Futures pare the early-day gains around 3,955, up 0.40% intraday, whereas the US 10-year Treasury yields stay defensive around one-month low, at 2.76% by the press time.
That said, North Korea’s firing of three missiles and Japan’s dislike for the same join the market’s anxiety ahead of today’s Fed Minutes and seem to also weigh on the market’s optimism. On the same line could be the news updating China’s covid lockdowns and its negative impacts on the world’s second-largest economy. “Beijing has continued its quarantine to end its month-old COVID outbreak, while in Shanghai, authorities plan to keep most restrictions in place this month, before a more complete lifting of the two-month-old lockdown from June 1,” said Bloomberg.
On Tuesday, downbeat prints of the US housing data and repeated Fedspeak, in contrast to the hawkish comments from the ECB, exerted downside pressure on the US Treasury yields and the US Dollar.
Having witnessed the initial reaction to the RBNZ moves, NZD/USD pair traders will wait for RBNZ Governor Adrian Orr’s Press Conference for fresh impetus. Should the policymaker hint at successive rate hikes, that too of higher grades, the Kiwi pair may add some gains. Following that, the US Durable Goods Orders for April, expected 0.6% versus 1.1% prior, will precede the Federal Open Market Committee (FOMC) Minutes to direct the NZD/USD moves.
Technical analysis
NZD/USD needs to defy Tuesday’s pin bar with a clear upside break of 0.6490 to reject the odds favoring a pullback towards the 21-DMA support of 0.6394. However, any further downside will make the Kiwi pair vulnerable to testing the 0.6300 threshold. Meanwhile, the monthly high surrounding 0.6570 stays on the bull’s radar until the quote stays above the 21-DMA.
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