NZD/USD remains bid despite NZ's Treasury's downward revision of neutral interest rate


  • New Zealand's Treasury revised neutral interest rate forecasts lower by 75 basis points. 
  • Treasury warned about downside risks to the economy. 
  • NZD/USD is showing resilience to negative newsflow. 

NZD/USD continues to march higher despite the decision by New Zealand's Treasury to revise lower its estimate for neutral interest rate by 75 basis points to 3%. 

The neutral rate of interest the rate at which monetary policy is neither contractionary nor expansionary. To put it another way is the short-term interest rate that would prevail when the economy is at full employment and stable inflation, according to brookings.edu. 

A downward revision of interest rate forecasts usually hurts the home currency. The Treasury also warned about downside risks to New Zealand's economy, citing worsening business surveys and global sentiment. So far, however, the NZD has shown no signs of stress. 

In fact, NZD/USD is now trading at a fresh session high of 0.6451 and is closing on the 100-day average resistance at 0.6463, as expected. The pair was trading around 0.6433 an hour ago. 

NZD's resilience is not surprising as dovish RBNZ expectations have been priced in. The Reserve Bank of New Zealand (RBNZ) stunned markets in August by cutting the official cash rate (OCR) by a bigger-than-expected 50 basis points to 1.00%.

NZD/USD

Overview
Today last price 0.6451
Today Daily Change 0.0024
Today Daily Change % 0.36
Today daily open 0.6427
 
Trends
Daily SMA20 0.6352
Daily SMA50 0.6341
Daily SMA100 0.6465
Daily SMA200 0.6593
 
Levels
Previous Daily High 0.6458
Previous Daily Low 0.6406
Previous Weekly High 0.6458
Previous Weekly Low 0.6333
Previous Monthly High 0.6437
Previous Monthly Low 0.6204
Daily Fibonacci 38.2% 0.6438
Daily Fibonacci 61.8% 0.6426
Daily Pivot Point S1 0.6403
Daily Pivot Point S2 0.6379
Daily Pivot Point S3 0.6351
Daily Pivot Point R1 0.6454
Daily Pivot Point R2 0.6482
Daily Pivot Point R3 0.6506

 


 

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