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NZD: Buy the Rumor sell the fact?

14 October 2021

The RBNZ confirmed a 25-basis-point rate raise, which had been widely anticipated and already factored into the markets. The NZD, however, did not benefit from the boost. Given that a 25-basis-point raise was widely anticipated and priced in prior to the meeting, the bar for a hawkish surprise was rather high heading into the meeting, and the fact that the RBNZ made no major modifications, the buy-the-rumour-sell-the-fact reaction was hardly surprising.

In the meeting, the RBNZ forecasted a total of seven rate hikes between Q4 of this year and H1 of 2023, which caused the NZD to move lower, but the general rate path remains unaltered, creating some demand.The most significant element of the RBNZ’s statement, however, was its assertion that “the existing COVID-19-related restrictions have had no major effect on the medium-term projections for inflation and employment since the statement they made in August.” Despite the possibility of inflation exceeding 4% in the near future, the bank’s inflation and employment outlooks remain intact.

The NZD now has the highest interest rate among the major currencies, at 0.50%.If conditions are good and even if we get just half of the expected hikes, the RBNZ will still remain much stronger than the other major currencies. As the interest rate rises in the next months, the NZD could gain carry appeal, especially against JPY, CHF, and EUR. So long as the virus is contained, the NZD’s medium-term bias expected to be positive.

NZDUSD price technical analysis

The NZDUSD price remains well bid above the 20-period and 50-period SMAs on the 4-hour chart. However, the recent surge still remains within the consolidation range. The broader cautious mode in the markets it doesnt look attractive for the technical traders at the moment. Despite the low volatility, the bias looks mildly positive, supported by the key SMAs.

The pair has to overcome the key hurdle at 0.7000 level, which is also a psychological mark. Any sustained move beyond the level may urge the buyers to turn attention to the horizontal level around the mid-0.7000 area. On the flip side, 0.6910 remains a strong support area ahead of 0.6860.




Scope for dips towards the 0.6793-0.6776 confluence zone
Scope for dips towards the 0.6793-0.6776 confluence zone

A dovish Reserve Bank of New Zealand (RBNZ) policy outcome this week, accompanied by a bloated NZD long positioning sees the kiwi breaking under a protracted...

25 Nov 2021

NZD/USD struggles for direction, flat-lined above mid-0.7100s
NZD/USD struggles for direction, flat-lined above mid-0.7100s

The NZD/USD pair seesawed between tepid gains/minor losses through the early part of the European session and was last seen trading in the neutral territory...

9 Nov 2021

Move beyond 50% Fibo. sets the stage for further gains
Move beyond 50% Fibo. sets the stage for further gains

NZD/USD gained strong traction for the fifth consecutive session on Tuesday. Sustained break through the 0.7100 confluence hurdle favours bullish traders...

19 Oct 2021

NZD/USD pares intraday gains, up little around 0.6915-20 area
NZD/USD pares intraday gains, up little around 0.6915-20 area

The risk-on impulse provided a modest boost to the perceived riskier kiwi on Thursday. Hawkish Fed expectations acted as a tailwind for the USD and capped gains for the pair...

7 Oct 2021

The Kiwi is falling
The Kiwi is falling

NZDUSD is being sold after the RBNZ meeting. The New Zealand Dollar is falling against the USD. The current quote for the instrument is 0.6880. During its October meeting...

6 Oct 2021

Trade of the Week: NZD sinks on single covid case. Can the kiwi recover?
Trade of the Week: NZD sinks on single covid case. Can the kiwi recover?

Entering this trading week, the New Zealand dollar had a roaring start to August, being the best-performing G10 currency against the US Dollar so far this month...

18 Aug 2021

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