- RBNZ cut rates by 25 basis points, sending NZD/USD down to its lowest level since Nov. 1.
- With the rate cut, New Zealand's 10-year bond yield has hit the lowest since Apr. 1.
The NZD/USD pair is feeling the pull of gravity, courtesy of the Reserve Bank of New Zealand's (RBNZ) decision to cut rates by 25 basis points to a new record low of 1.5%.
The pair is currently trading at 0.6566, having dropped 75 pips to hit a session low of 0.6525 – the lowest level since Nov. 1 – immediately after the rate decision.
It is worth noting that while most analysts had anticipated a rate cut, the probability as per the overnight index swap market was just 30%.
The kiwi, therefore, could remain under pressure during the day ahead – more so, as New Zealand's government bond yields have dropped following the rate decision.
As of writing, the benchmark 10-year yield is currently trading at 1.843%, down nearly five basis points on the day and at the lowest level since April 1. Meanwhile, the two-year yield, which is more sensitive to interest rate expectations, has slipped by more than four basis points to 1.4%.
The RBNZ's decision to cut rates comes a day after the Reserve Bank of Australia held rates unchanged at 1.5%, defying expectations of a rate cut.
Pivot points
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 assets. 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 Open Markets 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. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
AUD/USD: Gains appear capped near 0.6580
AUD/USD made a sharp U-turn on Tuesday, reversing six consecutive sessions of gains and tumbling to multi-day lows near 0.6480 on the back of the robust bounce in the Greenback.
EUR/USD looks depressed ahead of FOMC
EUR/USD followed the sour mood prevailing in the broader risk complex and plummeted to multi-session lows in the vicinity of 1.0670 in response to the data-driven rebound in the US Dollar prior to the Fed’s interest rate decision.
Gold stable below $2,300 despite mounting fears
Gold stays under selling pressure and confronts the $2,300 region on Tuesday against the backdrop of the resumption of the bullish trend in the Greenback and the decent bounce in US yields prior to the interest rate decision by the Fed on Wednesday.
Bitcoin price tests $60K range as Coinbase advances toward instant, low-cost BTC transfers
BTC bulls need to hold here on the daily time frame, lest we see $52K range tested. Bitcoin (BTC) price slid lower on Tuesday during the opening hours of the New York session, dipping its toes into a crucial chart area.
Federal Reserve meeting preview: The stock market expects the worst
US stocks are a sea of red on Tuesday as a mixture of fundamental data and jitters ahead of the Fed meeting knock risk sentiment. The economic backdrop to this meeting is not ideal for stock market bulls.