- NZD/USD is currently trading at 0.6749 as markets start to open there having made a slight correction from the 0.6810 tops.
- NZD/USD is taking its cues from a broadly better bid greenback as markets consolidate the recent themes that included the Democrat victory in Congress and a slightly more positive outlook from New Zealand's very own RBNZ.
NZD/USD travelled overnight in an orderly between 0.6797/70 ahead of the FOMC which titled the balance in the bear's favour to a low of 0.6741.
Outcome of FOMC meeting
Analysts at Westpac explained that the Fed voted unanimously to leave interest rates steady, their statement including just a couple of minor edits and overall continuing to acknowledge the robust economy and more gradual rate increases:
"Business investment was characterised as having, "moderated from its rapid pace earlier this year", a downgrade from "grown strongly", otherwise the Fed continues to note brisk conditions, repeatedly using “strong” to characterise the labour market, household spending and broader activity. The Fed provided no explicit signal for a December hike but that's not necessary with markets almost fully pricing one in."
As far as the RBNZ goes, it has certainly moved away from the idea of cutting the OCR following a series of impressive data of late. The RBNZ has gone as far as to remove the phrase that the next move in the OCR could be “up or down which buffers the birds upside potential.
Analysts at Westpac highlighted a few of the key themes as follows:
- The RBNZ also made it clear that hikes are not expected until mid-2020.
- The Monetary Policy Statement acknowledged stronger signs of inflation pressure, but kept the OCR forecast unchanged.
- Extraordinarily, the RBNZ is forecasting that inflation and employment will overshoot the targets in the medium term, yet it is not planning to remedy that by raising the OCR.
- This could become a theme – strong data but a Reserve Bank that declines to forecast a rising OCR.
- The “new” Reserve Bank is more dovish than the old.
NZD popped via the strong employment report and a further rally on the RBNZ meeting which puts it en route for a test of the 0.68 handle. A move there opens the prospects of a run to 161.8% extension of the said range to the 0.6870s. On the downside, 0.6700 guards a break down to the 38.2% fibo retracment of the recent swing lows and highs at 0.6680.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these securities. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Forex involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility.