InvestMacro

By Orbex

Next month’s policy meeting of the RBNZ is going to be pivotal because we can expect a policy change announcement.

In the world of central banks, that means that in tomorrow’s meeting, the bank is likely to hint at what the announcement will be in order to prepare the markets. So, we could get some extra volatility around the release of the decision tomorrow.

Another thing to keep in mind is that there appears to be something of a divergence between what analysts are expecting and what the market is pricing in.

On the one hand, economists are saying that the RBNZ will stay accommodative. On the other, the market is pricing in that the RBNZ will do something about the housing market.

What to expect

On the analyst side, there is a unanimous consensus among economists that the RBNZ will keep rates unchanged. That would fulfill their commitment to keep the OCR at 0.25% until March.

The question is what happens after March. So, many analysts are pointing to the release of the reserve bank’s forecasts, and expect the outlook to be improved.

On the traders’ side, low interest rates have fueled a spike in housing prices across the country. This has led many people to worry that a bubble is in full effect.

Given the expectation of an improved economic outlook, and the danger to financial stability, the RBNZ could address the issue. It’s unlikely to change policy.

But it could go as far as to announce a specific date by when rates could be raised.

The outlook is the key

The market reaction is likely to revolve around expectations for when the next rate hike will come. The current consensus is for well into next year, with most economists projecting a rate hike in the second half.

Should the RBNZ provide reasons to think that a rate hike will happen before then, we could see the kiwi strengthen.

This will provide another problem for the reserve bank, as their dollar has been progressively rising for almost a year now. And with the greenback expected to be weaker at least over the next few months, this will make reaching the reserve bank’s inflation target even more difficult.

Getting the balance right

Balancing these two concerns is going to be tricky. And it can lead to an unexpected market reaction if the Governor doesn’t choose his words carefully.

It’s also possible that we could get hints that the RBNZ might try to tackle the housing issue with unconventional policy, such as raising reserve requirements. This might make the market unhappy.

In fact, it could actually lower the kiwi more than announcing an extension of easing, as it would appear to weigh on New Zealand’s recovery.

Another challenge remains for the small island country. Their initial reaction got worldwide praise, and allowed the domestic market to keep functioning.

However, they have been slow to start vaccinations, with the first official jabs starting just this week. New Zealand depends heavily on tourism, and if the vaccine rollout is delayed, then the initial optimism might fade through the winter.

By Orbex

By Orbex

Greenback Continues Downside Bias

The US index dropped a further 0.25% at the start of the trading week, as it slumped further towards the 90 handle.

With its third straight day of declines, investors continue to focus on deliberations on Biden’s stimulus package and the expectancy of higher inflation.

In addition, America wakes up today with the knowledge that the country has passed a grim half a million deaths from the pandemic.

This led the EURUSD pair to rise 0.34% higher, as investors also expect a dovish tone from Fed Chair Powell later today.

With that being said, could the dollar sink back multi-year lows again?

Britain Reveals Roadmap to Recovery

Sterling maintained its multi-year high status, closing yesterday’s session 0.33% up.

Boris Johnson unveiled his four-step plan, each paced at least 5 weeks apart to ensure infection levels remain at a minimum.

This will see the UK gradually reopen and, if all goes as planned, be essentially back to normal by June.

With the UK ahead of the EU in the vaccination race, will the economy rebound at a much quicker rate?

Tech Stocks Slide as Nasdaq Plunges

US indices had a day to forget on Monday as both the Nasdaq and S&P ended lower by 2.5% and 1% respectively.

Big Tech stocks came under pressure with Apple, Amazon, and Microsoft all dropping 2%.

This comes as 10-year treasury yields jumped to their highest in a year, and they are on track for their largest monthly gain in three years.

Gold Takes the Ride

Gold jumped over 1.5% yesterday as it cemented its place back above the $1800 psychological level.

The yellow metal saw bulls intervene with the recent slump to monthly lows last week.

Stimulus and Covid-19 headlines continue to put gold on a rollercoaster ride, as investors now look towards this week’s fundamentals for further direction.

Oil Erases Losses

WTI rallied over 4% yesterday, punching through the $62 ceiling.

The upside remains supportive for the black gold. Even though the US passed 500,000 deaths from the pandemic, infections and deaths now continue to drop.

Also adding to the positive sentiment, Goldman Sachs upgraded its forecast for global crude oil demand for 2021, which could see oil rise to $70.

By Orbex

Article By RoboForex.com

USDCAD, “US Dollar vs Canadian Dollar”

On H4, the pair has formed an Inverted Hammer reversal pattern at the support level. If currently the quotations go by the signal, they might end at the resistance level. The aim of the pullback is 1.2690. Then the quotations might go on with the ascending impulse. However, the price might still skip the reversal signal and go down to 1.2510.

AUDUSD, “Australian Dollar vs US Dollar”

On H4, the quotations are preparing to develop an uptrend. At the resistance level, the pair has formed several reversal patterns, including a Hanging Man. The aim for going by the reversal signal is currently the support level near 0.7815. However, the quotations can still grow to 0.7985, neglecting the reversal signals.

USDCHF, “US Dollar vs Swiss Franc”

On H4, the quotations keep developing the uptrend. At the resistance level, the pair has formed a reversal pattern Shooting Star. The quotations keep going by the reversal signal. The aim of the decline is the support level at 0.8915. However, the price can still proceed upwards to 0.9045, ignoring the signals for a reversal.

Article By RoboForex.com

Attention!
Forecasts presented in this section only reflect the author’s private opinion and should not be considered as guidance for trading. RoboForex LP bears no responsibility for trading results based on trading recommendations described in these analytical reviews.

Article By RoboForex.com

AUDUSD, “Australian Dollar vs US Dollar”

On H4, the quotations are trading in the overbought area. Currently, the price is bouncing off +2/8. This means that the quotations are likely to fall to the nearest support at +1/8. A breakaway of +1/8 can provoke further decline to the next support at 8/8. The scenario might be canceled by a breakaway of +2/8 upwards. In this case, Murrey lines will be rearranged, so that new goals for growth will be set.

On M15, the falling of the price will be additionally supported by a breakaway of the lower line of VoltyChannel.

NZDUSD, “New Zealand Dollar vs US Dollar”

On H4, the quotations have reached the overbought area. Currently, we expect them to bounce off 8/8 and fall to the support at 6/8. This can be interpreted as a correction in the uptrend. Such a scenario can be canceled by a breakaway of 8/8 upwards, which will lead the quotations further upwards to the resistance at +1/8.

On M15, a breakaway of the lower border of VoltyChannel will increase the chances for a decline.

Article By RoboForex.com

Attention!
Forecasts presented in this section only reflect the author’s private opinion and should not be considered as guidance for trading. RoboForex LP bears no responsibility for trading results based on trading recommendations described in these analytical reviews.