NZD/USD drops 100 pips on RBNZ's dovish shift on interest rates
- RBNZ's dovish shift on interest rates has sent NZD lower across the board
- NZD/USD has dropped 100 pips in the last ten minutes and the 10-year New Zealand bond yield has shed 10 basis points.
The NZD is being offered across the board as the Reserve Bank of New Zealand (RBNZ) kept rates unchanged, but said the next rate move will likely be on the downside.
The dovish change in language on interest rates has sent NZD/USD pair down by 100 basis points, more so as markets were expecting the central bank to retain the neutral bias.
The central bank also said that balance to inflation risks has shifted to the downside and the core consumer price inflation target of 2 percent remains elusive even though the employment is near its maximum sustainable level. As a result, the policy needs to remain expansionary for a considerable period.
The 10-year New Zealand government bond yield has dropped ten basis points on RBNZ's dovish forward guidance, validating the sell-off in the NZD. As of writing, the pair is trading at 0.6810, having clocked a high of 0.6914 soon before the RBNZ's rate decision and the 10-year yield is seen at 1.78 percent.
Technical Levels
Author
Omkar Godbole
FXStreet Contributor
Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.
