The New Zealand dollar has sustained sharp losses on Wednesday. NZD/USD is currently trading at 0.6892, down 0.84% on the day.

RBNZ rate hike sends kiwi lower 

At the November policy meeting, the RBNZ raised rates for a second straight month, as promised. Policy makers likely didn’t expect the decision to send the New Zealand dollar for a tumble, but investors were clearly not impressed with the 0.25% rate hike, which brought the policy rate to 0.75%. The markets had priced in a 0.25% move, but there was disappointment from those traders who were hoping that the central bank would show an aggressive side and hike by 0.50%.

The New Zealand dollar took it on the chin, even though the bank signalled that it will need to tighten policy more quickly than anticipated in order to contain inflation. The RBNZ is now projecting that rates will rise to 2% by the end of 2022, a full year ahead of the previous projection in August. The rate statement noted that “the economy continues to perform above its current potential” and that employment was “above its maximum sustainable level”. In other words, the bank is clearly concerned about the economy overheating, and will raise rates to prevent that from happening.

The next policy meeting is not until February, so the New Zealand dollar, which is down 3.89% in November, will have to look elsewhere for support in the meantime. After the decision, Governor Orr said that the bank would act with caution and planned to tighten in 25 bps increments “for now”. Inflation will certainly be on the minds of Orr and his colleagues, as inflation is currently at 4.9% and the RBNZ is projecting it will hit 5.7% in the fourth quarter.

NZD/USD technical

  • There is resistance at 0.6958 and 0.7059.

  • NZD/USD is down sharply and continues to break below support levels. There is support at 0.6857, which has held since late August. Below, 0.6747 is a monthly support level.

NZDUSD

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities.

Opinions are the authors — not necessarily OANDA’s, its officers or directors. OANDA’s Terms of Use and Privacy Policy apply. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Feed news

Latest Forex Analysis


Latest Forex Analysis

Editors’ Picks

EUR/USD retreats below 1.1300 area as NFP-inspired dollar weakness fades

EUR/USD jumped to a daily high of 1.1333 with the initial market reaction to the disappointing November Nonfarm Payrolls data but quickly returned below 1.1300. Rising US Treasury bond yields seem to be helping the dollar stay resilient against its major rivals. 

EUR/USD News

GBP/USDdrops to 1.3250 area as dollar regains strength

GBP/USD spiked above 1.3300 in the early American session with the initial market reaction to the gloomy US November jobs report. However, the greenback regathered strength on hawkish Fed commentary and forced the pair to turn south.

GBP/USD News

Gold struggles to capitalize on weak NFP data, holds near $1,770

Gold spiked to a daily high near $1,780 with the initial market reaction to the disappointing Nonfarm Payrolls data from the US but seems to be having a difficult time preserving its bullish momentum with the 10-year US T-bond yield staying resilient.

Gold News

The bull and the bear case for BTC

Bitcoin price saw a bullish impulse that faced massive headwinds before it tagged a crucial psychological barrier. Bitcoin is likely to experience massive volatility as the situation resolves over time. 

Read more

Cyber Monday 2021 Discounts!

Glued to your trading screen on Cyber Monday? Upgrade your skills by signing up for FXStreet’s Premium service, offered at a discount of up to 50%. Fellow traders have already taken advantage of Black Friday profits. What about you? 

Subscribe now!

Majors

Cryptocurrencies

Signatures