When is the RBNZ and how it could affect NZD/USD?

Early Wednesday at 01:00 GMT market sees the key monetary policy decision by the Reserve Bank of New Zealand (RBNZ). New Zealand’s central bank is at the key stage of the economic cycle where the recovery moves from the coronavirus (COVID-19) need justification but the latest economics haven’t confirmed the bull’s arrival. It should be noted that Governor Adrian Orr and the company aren’t famed for pleasing the bears, which in turn makes today’s event an important one. As a result, the speech from RBNZ’s Orr, starting from 02:00 GMT, will also be crucial to watch.

Market consensus favors no change in the benchmark interest rate, currently at 0.25%, or the Large Scale Asset Purchases (LSAP) during today’s monetary policy meeting. However, the economic forecast and the way out of easy money, amid rumors of future tightening, will be closely watched for near-term direction.

Ahead of the event, Australia and New Zealand Banking Group (ANZ) said,

We expect the RBNZ will acknowledge better data with forecast upgrades, but that they will send a clear message that stimulus will remain in place for a long time, potentially reinstating a flat (actual) OCR forecast and/or installing new forward guidance – perhaps saying the OCR will be on hold until 2023 at the earliest. We see the LSAP limit being left at $100bn today, but the timeframe extended. It would be clearer for the market to switch to communicating purchases to the market in pace terms and that could happen as soon as today too.

Also joining the bears’ league is TD Securities that said,

We expect the RBNZ to keep all policy settings unchanged at the upcoming MPS- OCR at 0.25%. The RBNZ is likely to acknowledge the stronger than anticipated recovery so far, with nearly all NZ data outcomes exceeding RBNZ's and market expectations. However, we expect them to highlight that OCR hikes are not on their radar given that the recovery is patchy and that downside risks remain. Focus to turn to the LSAP program.

How could it affect NZD/USD?

NZD/USD takes rounds to a 34-month low while recently easing to 0.7340 ahead of the much-awaited event by the kiwi traders. Given the RBNZ’s likely cautious optimism, the quote may extend its upward trajectory towards the year 2018 peak. However, the bulls seem tiring off-late and hence any hidden bearish clues, mainly from economic forecasts or the way to exit the easy money flow, can trigger a fresh pullback.

On the same line, FXStreet’s Dhwani Mehta says, “Hints towards a rate hike could spark a correction in NZD/USD.”

Technically, January 2021 peak surrounding 0.7315, followed by the 0.7300 round-figure, will challenge the pullback moves, if any. Alternatively, April 2018 high near the 0.7400 threshold may lure immediate buyers ahead of directing them to the year 2018 peak close to 0.7445.


NZD/USD consolidates close to cycle highs above 0.7300 ahead of RBNZ rate decision

RBNZ Preview: To hold fire, upgrade its economic forecasts

About the RBNZ interest rate decision and rate statement

The RBNZ interest rate decision is announced by the Reserve Bank of New Zealand. If the RBNZ is hawkish about the inflationary outlook of the economy and raises the interest rates it is positive, or bullish, for the NZD. The RBNZ rate statement contains the explanations of their decision on interest rates and commentary about the economic conditions that influenced their decision.

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: Run-up to 0.8000 slows down near 36-month top amid mixed clues

AUD/USD struggles to keep recovery moves above 0.7879 above 0.7900. Powel matched expectations of reprinting cautious optimism, tried to placate reflation fears. Australia’s Q4 Wage Price Index, risk catalysts in the spotlight.


Gold bulls trying to defend $1,800 amid cautious optimism

Gold keeps $1,800, while struggling to defy the previous day’s pullback from a one-week top during the initial Asian session on Wednesday. The yellow metal snapped the two-day winning streak amid the US dollar’s corrective pullback.

Gold news

RBNZ Preview: To hold fire, upgrade its economic forecasts

New Zealand’s relative success in combating the coronavirus pandemic has propelled a swift economic recovery. Therefore, the Reserve Bank of New Zealand (RBNZ) could remain in a wait-and-see mode on Wednesday before it announces any adjustments to its monetary policy decision later this year.

Read more

Crypto market menaced as it bleeds amid $6 billion liquidations

Cryptocurrencies are gasping for air after corrections occurred across the board. The bloodshed has seen Bitcoin lose over 14% in 24 hours, testing support at $45,000. Ethereum did not escape the freefall, which has led to losses below $1,500.

Read more

US Dollar Index: Formidable support is located at 90.00

DXY tests and rebound from the key 90.00 neighbourhood. Further south of this level comes in the 2021 lows at 89.20.

US Dollar Index News