- Dovish RBNZ outlook triggers some initial weakness during the Asian session.
- The downtick turns out to be short-lived as 25bps rate cut is already priced in.
- The intraday up-move seemed unaffected by a follow-through USD recovery.
The NZD/USD pair built on its post-RBNZ positive momentum and climbed further beyond mid-0.6600s to hit near three-week tops in the last hour.
The pair initially slipped to sub-0.6600 level in a knee jerk reaction to dovish forward guidance by the Reserve Bank of New Zealand (RBNZ) – leaving doors open for an eventual rate cut, before moving back into positive territory for the eighth consecutive session.
Given that a 25 bps rate cut is largely priced in, the downtick lacked any strong follow-through rather was quickly bought into. The pair witnessed a dramatic turnaround and extended the momentum through the early European session, shrugging off a follow-through US Dollar uptick.
The greenback built on the overnight goodish bounce from multi-month lows – triggered by not so dovish comments by St Louis Fed President James Bullard and the Fed Chair Jerome Powell, and was further supported by recovering US Treasury bond yields, though did little to hinder the positive momentum.
Moving ahead, market participants now look forward to the US economic docket – featuring the release of durable goods orders, for some meaningful impetus later during the early North-American session. The key focus, however, will remain on the upcoming Trump-Xi meeting on the sidelines of G20 summit later this week.
Technical levels to watch
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