RBNZ Preview: NZD/USD to stand resilient despite readiness for negative rates


The Reserve Bank of New Zealand (RBNZ) is expected to keep rates steady at 0.25% in November and unveil a new stimulus tool, heading towards negative rates. Kiwi’s fate hinges on forward guidance and risk sentiment, FXStreet’s Dhwani Mehta reports. 

The policy announcement is scheduled this Wednesday at 01:00 GMT followed by Governor Adrian Orr’s Orr will hold a press conference at 02:00 GMT.

More:

Key quotes

“The RBNZ is likely to keep the Official Cash Rate (OCR) unchanged at a record low of 0.25% for the fifth straight month in November. However, the central bank is set to introduce a new stimulus tool in a Funding for Lending Programme (FLP). The new policy tool will provide cheap funding to the banks, allowing them to further reduce their lending rates.”

“The FLP is seen as a crucial step towards negative interest rates, as the Kiwi central bank prepares for sub-zero rates next year, in a bid to spur economic growth. The programme could be established before the end of the year.”  

“The New Zealand Institute of Economic Research’s (NZIER) Shadow Board continues to question the need for negative rates and additional quantitative easing (QE) program expansion. Therefore, it's important for the RBNZ to launch the FLP to spur growth and make a negative OCR effective when it plans to deploy sub-zero rates early next year.”

“The market mood remains upbeat as the progress in vaccine trials globally paves that way for a solid economic recovery, benefiting the higher-yielding assets, including the Antipodean. Therefore, a strong dovish language in the policy statement is needed to alter NZD/USD’s bullish course. Although, the risk sentiment at the time of the announcement could also impact the kiwi’s reaction.”

 

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.

Feed news

Latest Forex News


Latest Forex News

Editors’ Picks

AUD/USD fades an uptick above 0.7400 despite upbeat China's PMIs

AUD/USD pares gains and drops back below 0.7400 amid a cautious market mood, reflected by the losses in the S&P 500 futures. Australian-Sino trade tussle outweighs the vaccine optimism and upbeat Chinese NBS PMIs. 

AUD/USD News

EUR/USD: Refreshes three-month high towards 1.2000, battles triangle resistance

EUR/USD eases from fresh high since September 01. The pair rose to the highest in three months before a few hours but couldn’t cross the upper line of a five-week-old ascending triangle formation. RSI conditions warrant caution, bears are less likely to take entries above 1.1870.

EUR/USD News

NZD/USD refreshes 2.5-year high on strong China PMI above 0.7400

NZD/USD rises to the fresh high since June 2018 after China data. China’s NBS Manufacturing PMI, Non-Manufacturing PMI beat market forecasts in November. ANZ Business Confidence, Activity Outlook also came in positive for November.

NZD/USD News

Gold: Trades below 200-day MA for first since March

Gold is trading below the widely-followed 200-day Simple Moving Average (SMA) for the first time since March. The metal is changing hands near $1,783 per ounce, representing a 0.25% loss on the day. 

Gold news

Black Friday 2020 Discounts!

Learn to trade with the best! Don't miss the most experienced traders and speakers in FXStreet Premium webinars. Also if you are a Premium member you can get real-time FXS Signals and receive daily market analysis with the best forex insights!

More info

Forex MAJORS

Cryptocurrencies

Signatures