RBNZ Likely Holds Interest Rate Steady

Reserve Bank of New Zealand (RBNZ) will have monetary policy announcement at 02.00 GMT this Wednesday. Market consensus is for the central bank to keep Overnight Cash Rate (OCR) at 1%. RBNZ has cut 50 bps last month, more than market’s expectation. Thus RBNZ is likely to wait a little bit to see the impact of their previous decision. Inflation was last reported on July 15 at 1.7% y/y, below the 2% mid-point of the 1-3% target range. Recent report of Q2 GDP is in line with central bank’s expectation.

However, global outlook remains fragile with ongoing US-China trade war, thus the bank is likely to reaffirm downside risk. Traders will look for clues from the statement to see if the central bank will have a follow-up rate cut further down the road. If conditions continue to deteriorate and global economic slowdown continues to pose downside risks for the New Zealand economy, the RBNZ maybe forced to cut again in November.

There are three possible outcomes from this Wednesday’s meeting:

RBNZ holds the OCR at 1% but gives a hint of possible rate cut down the line. In this case, NZDUSD may see further downside.

RBNZ cuts the rate by 25 bps. NZDUSD will likely selloff as the market is not expecting RBNZ to cut again this soon.

RBNZ holds OCR at 1% and the statement doesn’t show commitment to rate cut. In this case, NZDUSD may recover further before the bearish pressure reasserts. This option seems to be the most likely outcome as the bank wants to wait and see.

NZD/USD 1 Hour Elliott Wave Outlook

Technically, $NZDUSD recently broke below September 3 low (0.627) and the pair shows incomplete sequence from July 19 high, favoring further downside. Near term, wave ((ii)) bounce is expected to fail in 3, 7, or 11 swing and pair can resume lower as far as pivot at 0.645 high stays intact. If the central bank maintains the OCR and does not commit to any action, then the technical outlook seems to fit with the narrative of larger correction in the pair before the bearish pressure appears again.

Share: Analysis feed

FURTHER DISCLOSURES AND DISCLAIMER CONCERNING RISK, RESPONSIBILITY AND LIABILITY Trading in the Foreign Exchange market is a challenging opportunity where above average returns are available for educated and experienced investors who are willing to take above average risk. However, before deciding to participate in Foreign Exchange (FX) trading, you should carefully consider your investment objectives, level of xperience and risk appetite. Do not invest or trade capital you cannot afford to lose. EME PROCESSING AND CONSULTING, LLC, THEIR REPRESENTATIVES, AND ANYONE WORKING FOR OR WITHIN WWW.ELLIOTTWAVE- FORECAST.COM is not responsible for any loss from any form of distributed advice, signal, analysis, or content. Again, we fully DISCLOSE to the Subscriber base that the Service as a whole, the individual Parties, Representatives, or owners shall not be liable to any and all Subscribers for any losses or damages as a result of any action taken by the Subscriber from any trade idea or signal posted on the website(s) distributed through any form of social-media, email, the website, and/or any other electronic, written, verbal, or future form of communication . All analysis, trading signals, trading recommendations, all charts, communicated interpretations of the wave counts, and all content from any media form produced by www.Elliottwave-forecast.com and/or the Representatives are solely the opinions and best efforts of the respective author(s). In general Forex instruments are highly leveraged, and traders can lose some or all of their initial margin funds. All content provided by www.Elliottwave-forecast.com is expressed in good faith and is intended to help Subscribers succeed in the marketplace, but it is never guaranteed. There is no “holy grail” to trading or forecasting the market and we are wrong sometimes like everyone else. Please understand and accept the risk involved when making any trading and/or investment decision. UNDERSTAND that all the content we provide is protected through copyright of EME PROCESSING AND CONSULTING, LLC. It is illegal to disseminate in any form of communication any part or all of our proprietary information without specific authorization. UNDERSTAND that you also agree to not allow persons that are not PAID SUBSCRIBERS to view any of the content not released publicly. IF YOU ARE FOUND TO BE IN VIOLATION OF THESE RESTRICTIONS you or your firm (as the Subscriber) will be charged fully with no discount for one year subscription to our Premium Plus Plan at $1,799.88 for EACH person or firm who received any of our content illegally through the respected intermediary’s (Subscriber in violation of terms) channel(s) of communication.