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RBNZ lifts NZD/USD from the abyss – jumps 100+ pips

The central bank in New Zealand did NOT  follow quite a few of its peers and left the interest rate unchanged. While this was quite expected from the outset, the actual decision came on the background of immense USD strength.

So, the kiwi is shooting higher: NZD/USD is trading around 0.7250, jumping up from below 0.72.

The  institution led by Graeme Wheeler decided to keep the rate at 3.50% and said that it foresees a “period of stability for rates”,  basically repeating the neutral stance expressed  in the previous rate decision.

In their updated forecasts, the member of the Reserve Bank of New Zealand did cut the annual CPI  forecast to 0.4% at the end of this year from 1.5% beforehand. However, GDP growth was cut from 3.5% to 3.2% – still very robust growth.

The Bank sees inflation returning  to the midpoint of the range  in a gradual manner.

Perhaps more importantly, RBNZ governor Wheeler stated that the he is pleased with the level of NZD/USD. This extends the pair’s ride higher – 0.7285 at the time of writing.

In addition, Wheeler said that New Zealand’s situation is different than those who cut rates. He might be hinting at neighbor Australia that surprised with a rate cut in February and maintains a dovish stance, as well as commodity peer Canada that cut the rate in January  but maintains an upbeat tone.

They are still concerned over an overheating in Auckland’s housing business. This is also very bullish for the New Zealand dollar.

Update: NZD/UDS is already knocking at 0.73.

Here is the NZD/USD chart showing the clear turnaround:

NZDUSD March 12 2015 jumps over 100 pips on RBNZ decision and hawkish Wheeler comments on NZD

Yohay Elam

Yohay Elam

Yohay Elam: Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I've accumulated. After taking a short course about forex. Like many forex traders, I've earned a significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I've worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts.