However, the RBNZ's clear bias towards another rate cut sparked a steep fall in the kiwi and the recovery has far to go and struggles at the 100 sma on the 4hr chart at 0.6500.
Analysts at TD Securities explained that the RBNZ shifted to an explicit easing bias stating Ã¢â‚¬Å“Some further policy easing may be required over the coming year to ensure that future average inflation settles near the middle of the target rangeÃ¢â‚¬Â but stopped short of signalling a cut as early as March."
"The RBNZ took the liberty to mention its core inflation rate for the first time, most likely the Bank's effort to signal that it will not be pressured to cut rates on Ã¢â‚¬Å“zeroÃ¢â‚¬Â headline inflation alone. That said, it did acknowledge the risks and most of them are point to further easing - Global growth, particularly China, dairy prices, net immigration and the housing market."
Fonterra cuts milk price forecast, says global conditions challenging
It was a busy day for the kiwi, as prior to the RBNZ, Fonterra reduced its forecast Farmgate Milk Price for the 2015/16 season from $4.60 to $4.15 per kgMS. Then, after the RBNZ, the trade Balance for Dec was a narrower deficit of ~NZ$50m, vs near -NZ$800m in Nov. However, the firmer Exports were mostly ignored. Meanwhile, the RBNZ also signaled for a further decline in the bird and all in all, the outlook on a fundamental basis remains clearly bearish.
US GDP Q4 next main event
We will now await the next main catalyst in the US being the GDP Q4 on Friday and that event can be watched live at FXStreet here.
Technically, the 100 sma on the 4hr comes as a resistance at 0.6500 while spot trades at the pivot of 0.6463 with no short-term bias one way or the other with RSI (14) in neutral on the hourly chart at 55 currently.
While the price trades below the daily cluster of ma's that include a clear bearish cross with the 20 moving below the 100 dma, the price remains in better offered territory targeting 0.62 on the medium term. On a break to the downside, S1 comes at 0.6371 ahead of S2 at 0.6355.
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