NZD/USD sits tight ahead of the RBNZ, focus on QE and forward guidance

NZD/USD is trading at 0.6082 within a 0.6073 and 0.6086 tight range following a flat close from trade overnight. Today's showdown for Asian markets and the bird will be the Reserve Bank of New Zealand (RBNZ) interest rate decision. 

The RBNZ will likely leave its OCR on hold at 0.25%, so, instead, the focus will be on the QE program. Analysts at Westpac expect he QE to be increased to NZ$60bn.

Markets will also be interested in forward guidance on the OCR, the RBNZ in March committing to no changes before March.

RBNZ previews

• RBNZ Preview: Just a mention to negative rates could weigh on the kiwi
• RBNZ MPS Preview: Expected to keep rates unchanged at 0.25%

Meanwhile, risk sentiment is low. The US head of infectious diseases Dr. Anthony Fauci has be warning that an easing of restrictions too early could “trigger an outbreak that you might not be able to control.”

Investors are staying vigilant as cases start to climb in nations such as China and Germany as restrictions give way t the contagion. At the same time, trade wars remain on the boil and weigh on risk sentiment. 

As for US data, the US headline Consumer Price Index dropped by 0.8% MoM, as expected, for an annual pace of +0.3% YoY, (vs est. +0.4%YoY). Weighing on the greenback, markets are now expecting for the headline CPI rate to fall below zero YoY in Q2 and Q3. This will mark the worst period of disinflation since the 2008-09 recession.

 Looking ahead for the day, markets will be looking out for Fed chair Powell discussing current economic issues in a webinar hosted by the Peterson Institute in the NY morning.

NZD/USD levels