RBNZ lowers rates by 50 bps, NZ Dollar gains ground

Kenny Fisher MarketPulse

The New Zealand dollar has posted gains on Wednesday. NZD/USD is trading at 0.5721 in the European session, up 0.31% on the day.

RBNZ chops rates by 50 bps as expected

The Reserve Bank of New Zealand slashed the cash rate by 50 basis points, bringing the cash rate to 3.75%. The markets had priced in the cut at 90% so there was no surprise at the jumbo cut. This lowered the cash rate to its lowest level since Nov. 2o22. The RBNZ demonstrated again that it can be aggressive, as it has cut rates by 175 basis points since the easing cycle started last August.

The New Zealand dollar is stronger on Wednesday, which is somewhat surprising, given the jumbo rate cut and the RBNZ’s signal that further rate cuts are on the way in the coming months.

The rate statement noted that the members were confident lowering rates as CPI remained near the midpoint of the 1%-3% target band. At the same time, members expressed concern that economic activity in New Zealand and abroad were “subdued” which posed a risk to economic growth.

The statement also made a brief mention of “trade restrictions” which could dampen economic growth. No mention was made of US President Trump’s tariff threats but policymakers are clearly concerned that US tariffs, even if not aimed directly at New Zealand, could chill the global economy and hurt the country’s key export sector.

In a follow-up press conference, Governor Adrian Orr said that the Bank expected to lower the cash rate to 3% by the end of the year. This forecast was lower than the November projection of 3.2% by year’s end. The central bank is expected to deliver smaller rate cuts of 25-bps in the coming months.

NZD/USD technical

NZD/USD is testing resistance at 0.5713. Above, there is resistance at 0.5731.
0.5686 and 0.5668 and the next support levels.

Author

Kenny Fisher

MarketPulse

A highly experienced financial market analyst with a focus on fundamental analysis, Kenneth Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities.

EUR/USD keeps the rangebound trade near 1.1850

EUR/USD is still under pressure, drifting back towards the 1.1850 area as Monday’s session draws to a close. The modest decline in spot comes as the US Dollar picks up a bit of support, while thin liquidity and muted volatility, thanks to the US market holiday, are exaggerating price swings and keeping trading conditions choppy.

GBP/USD trades with negative bias, eyes 1.3600 ahead of UK jobs data

The GBP/USD pair trades with a negative bias for the second straight day, though it lacks bearish conviction and holds above the 1.3600 mark through the Asian session on Tuesday. Traders now look forward to the release of the UK monthly jobs report, which will influence the British Pound and provide some impetus to the currency pair.

Gold sticks to a negative bias below $5,000; lacks bearish conviction

Gold remains depressed for the second consecutive day and trades below the $5,000 psychological mark during the Asian session on Tuesday, as a positive risk tone is seen undermining safe-haven assets. Meanwhile, bets for more interest rate cuts by the Fed keep a lid on the recent US Dollar bounce and act as a tailwind for the non-yielding bullion, warranting caution for bearish traders ahead of FOMC minutes on Wednesday.

AI Crypto Update: Bittensor eyes breakout as AI tokens falter

The artificial intelligence (AI) cryptocurrency segment is witnessing heightened volatility, with top tokens such as Near Protocol (NEAR) struggling to gain traction amid the persistent decline in January and February.

US CPI is cooling but what about inflation?

The January CPI data give the impression that the Federal Reserve is finally winning the war against inflation. Not only was the data cooler than expected, but it’s also beginning to edge close to the mystical 2 percent target. CBS News called it “the best inflation news we've had in months.”

XRP steadies in narrow range as fund inflows, futures interest rise

Ripple is trading in a narrow range between $1.45 (immediate support) and $1.50 (resistance) at the time of writing on Monday. The remittance token extended its recovery last week, peaking at $1.67 on Sunday from the weekly open at $1.43.