NZD/USD hits lowest since October on bigger-than-expected RBNZ rate cut

NZD takes a hit as RBNZ cut rates by 50 basis points to 1.00%.
Markets were positioned for a 25 basis point cut.
NZD/USD fell to the lowest level since October on dovish RBNZ.

Omkar Godbole FXStreet Contributor

NZD/USD slipped to multi-month lows soon before press time on a bigger-than-expected interest rate cut by the Reserve Bank of New Zealand.

The central bank cut the official cash rate (OCR) by 50 basis points to a new record low of 1.00%. The market was priced for a 25 basis point rate cut.

The move to cut rates by 50 basis points has sent NZD lower across the board. The NZD/USD pair is currently trading at 0.6473, representing a 0.80% drop on the day. The pair hit a low of 0.6444 immediately after the RBNZ rate cut. That has been the lowest level since Oct. 10, 2018.

The pair could suffer deeper losses during the day ahead as the central bank has revised lower the OCR forecast for December 2020 to 0.91% from the previous forecast of 1.36%.

The RBNZ also added that the neural interest rate level is now lower and the 50 basis point cut was necessary to support employment and inflation policy.

Pivot levels

1. R3 0.6658
2. R2 0.6624
3. R1 0.6577
PP 0.6543
1. S1 0.6495
2. S2 0.6461
3. S3 0.6414

Author

Omkar Godbole

FXStreet Contributor

Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.

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