- RBNZ keeps the policy rate unchanged at 1.5% as expected.
- Latest headlines revived hopes of the U.S.-China bringing trade conflict to an end.
- US Dollar Index clings to small daily gains despite uninspiring data.
Following a quick drop to 0.6615 with the knee-jerk reaction to the Reserve Bank of New Zealand’s (RBNZ) policy statement, the NZD/USD pair didn’t have a difficult time turning positive on the day and is now looking to extend its winning streak into 10th straight day. As of writing, the pair was up 0.67% on the day at 0.6682.
As expected, the RBNZ announced that it left its policy rate unchanged at 1.5%. Assessing the policy statement, “Today’s statement was in line with our expectations heading into the rate decision with the RBNZ shifting from a ‘balanced’ outlook to an easing bias – ‘a lower OCR may be needed’,” said Prashant Newnaha, senior Asia-Pacific rates strategist at TD Securities.
Revived hopes of the U.S. and China trade war coming to an end today helped antipodeans such as kiwi and the AUD gather strength. Earlier in the day U.S. Treasury Secretary Mnuchin claimed that the trade deal was 90% completed. Complementing this comment, President Donald Trump stated that it was possible for them to reach a trade agreement with China when he meets Chinese President Xi at the G20 summit this weekend in Osaka, Japan.
On the other hand, today’s data from the U.S. showed that durable goods orders contracted by 1.3% on a monthly basis in May to fall short of the market expectation for a decline of 0.1%. Other data showed that the trade deficit in May rose to $74.55 billion. Despite the disappointing data, however, the US Dollar Index clings to small gains supported by recovering Treasury bond yields and caps the pair’s gains for the time being.
Technical levels to watch for
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