NZD/USD jumps 100 pips after RBNZ rate decision

The NZD/USD jumped 100 pips to 0.6828 post-RBNZ rate decision.
RBNZ kept the interest rates unchanged at 1.75 percent and said the next move in rates could be up or down.
NZ-US bond yield differentials remain depressed near three-month lows.

Omkar Godbole FXStreet Contributor

The bid tone around the NZD strengthened, sending NZD/USD well above 0.68 after the Reserve Bank of New Zealand (RBNZ) kept the interest rates unchanged 1.75 percent.

In an expected dovish shift, the central bank pledged to keep the overnight cash rate at 1.75 percent through 2019 and 2020 and said the next move in rates could be up or down. The central bank also cited downside risks to inflation and stressed the need to keep policy supportive as the core consumer price inflation remains below the objective of 2 percent target mid-point.

The positive response from the NZD suggests the markets were likely positioned for a much more dovish RBNZ.

That said, the NZD/USD pair could retrace part of the 100-pip rally seen in the last few minutes as the 10-year NZ-US yield spread is still hovering at a three-month low of -58.78 basis points.

Technical Levels

1. R3 0.6776
2. R2 0.676
3. R1 0.675
PP 0.6734
1. S1 0.6724
2. S2 0.6708
3. S3 0.6698

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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