The Buzz: RBNZ to leave rates on hold
Ahead of the RBNZ rate decision market is expecting rates to be left on hold as the New Zealand economy continues to lag behind its larger neighbor Australia, with exports falling 22.4% since the beginning of 2009.The RBNZ is very well aware of the negative effects the strong NZD has on New Zealand’s exports and has stated the fall in exports will weigh on GDP growth. Hence it is not surprising the consensus bets are that the rate will be left on hold at 2.5%.
So how should roll the dice?
A positive outlook from the RBNZ- if the RBNZ will provide an optimistic outlook on the Kiwi economy especially regarding to exports this will be interpreted as the Governor feels comfortable enough exports will recover and investors will feel future rate hikes look more reasonable. If this is the case it could provide some support for the NZD. However if the RBNZ will mention once again the pressure high NZD places on New Zealand’s exports this could ignite another round of heavy bids for the Kiwi.
Technical Analysis:
USD/NZD
Bearish Scenario- A break of the 0.7 key level downwards would ignite a strong bearish momentum targeting the 0.65 zone.
Target-0.66
Bullish scenario- A daily close above 0.73 would push the pair to retest the 0.75 resistance.
Target-0.746
Daily Forex Market Analysis provided by eToro
Disclaimer: Trading in the Foreign Exchange market might carry potential rewards, but also potential risks. You must be aware of the risks and are willing to accept them in order to trade in the foreign exchange market. Don’t trade with money you can’t afford to lose.
