NZD/USD has dropped 20 pips on the back of the RBNZ holding rates steady as widely expected at the new governor's first MPC meeting since picking up the baton on the 27th March.
This rate of 1.75% was last changed in Nov 2016 and seems as though Adrian Orr will keep it so for a considerable period of time.
Key notes from the statement as follows:
- Sees official cash rate at 1.8% in September 2018 (unchanged)
- Sees official cash rate of 1.8% in June 2019 (down from 1.9%)
- Lows food, import price inflation, subdued wages keep inflation down
- CPI remains below 2%
- Expects to keepOCR at this expansionary level for a considerable period of time
- Have seen an unprecedented increase in employment
- Immigration added to the supply of labor
- Keeping OCR at current level best contribution to maximizing sustainable employment
- Keeping OCR and current level best contribution to maintaining low and stable inflation
- The direction of our next move is equally balance, up or down
- Global inflation pressures are expected to rise but remain contained
No hawkish surprises here nor any new trends under the new leadership or material changes to targets. eyes will now focus on US CPI tonight after the US PPI underperformed in the US overnight where any undershooting of inflation should ease the recent resurgence in the dollar on the 93 handle in the DXY, (overnight high was 93.41)
NZD/USD levels
The Kiwi has been sold off heavily since the Feb meeting, dropping from the lofty heights of 0.7436 down to 0.6948, (a new trend low). Seems like the bird is heading towards that level now after the RBNZ. The NZD/USD has dropped below the key 200-month moving average support at 0.6980 and technicals stay bearish with RSIs biased to the downside longer term, although stabilising out of oversold territory - pointing to a period of consolidation. To the downside, 0.6948 guards 0.6880.
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