The RBNZ sets interest rates on a monthly basis. It is one of the most important New Zealand indicators and an unexpected reading can have a strong effect on the movement of NZD/USD. A reading which is higher than the market forecast is bullish for the New Zealand dollar.
Here are the details and 5 possible outcomes for NZD/USD.
Published on Wednesday at 20:00 GMT.
Indicator Background
Interest rate levels are an important component of monetary policy. The RBNZ could decide to lower rates in order to boost inflation levels or kick-start economic growth.
The RBNZ has lowered rates by a quarter-point twice this year, as rates are currently at an even 2.00%. The markets are predicting another quarter-point cut to 1.75% on Wednesday. Such a move could push the New Zealand dollar to lower levels.
Sentiment and Levels
While the kiwi on a strong roll and trading at 8-week highs, the upward trend could continue. At the same time, a Clinton victory in the US election could boost the greenback. So, the overall sentiment is bearish on NZD/USD towards this release.
Technical levels from top to bottom: 0.7400, 0.7330, 0.7265, 0.7230 and 0.7160
5 Scenarios
- Within expectations: 1.75%: In this scenario, NZD/USD could show some slight fluctuation, but it is likely to remain within range, without breaking any levels.
- Above expectations: 2.00%: If the RBNZ maintains rates, NZD/USD could move upwards.
- Well above expectations: 2.25%: This scenario is extremely unlikely.
- Below expectations: 1.50%: A cut of more than 0.25 points is an unlikely scenario.
- Well below expectations: 1.25%.This scenario is extremely unlikely.
For more on the kiwi, see the NZD/USD forecast.
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