- As widely expected, the RBNZ left the OCR at 1.75%.
- NZD/USD remains around where it started with little reaction, (a slight bid), to the decision.
NZD/USD ticked higher on the RBNZ non-event for market’s meeting, but in the longer-term, this could play out bearish for the bird due to the divergence between the Fed and RBNZ considering that the NZ economy doesn’t warrant a move from the RBNZ until 2020 while the move could be up or down. Currently, the NZD/USD is trading at 0.6664 from a high of 0.6696 and a low of 0.6629.
We don’t get an official Monetary Policy Statement today nor a media conference so the press release will have to do as follows, (The 8th of November RBNZ meeting will be followed by a Monetary Policy Statement and press conference):
- We expect to keep the OCR unchanged into 2020
- Direction of our next OCR move could be up or down.
- Employment is around its sustainable level
- consumer price inflation remains below the 2 percent mid-point of our target, necessitating continued supportive monetary policy
- Our outlook for the OCR assumes the pace of growth will pick up over the coming year, assisting inflation to return to the target mid-point.
- Our projection for the New Zealand economy, as detailed in the August Monetary Policy Statement, is little changed.
- Robust global economic growth and a lower New Zealand dollar exchange rate is expected to support demand for our exports.
- Trade tensions remain “¦ increasing the risk that ongoing increases in trade barriers could undermine global growth
- Domestically, ongoing spending and investment, by both households and government, is expected to support growth.
- There are welcome early signs of core inflation rising towards the mid-point of the target.
- Higher fuel prices are likely to boost inflation in the near term, but we will look through this volatility as appropriate. Consumer price inflation is expected to gradually rise to our 2 percent annual target as capacity pressures bite.We will keep the OCR at an expansionary level for a considerable period to contribute to maximising sustainable employment, and maintaining low and stable inflation.
“While the FOMC kept its ‘dots’ unchanged, the removal of “accommodative” in describing the policy stance was perceived as mildly dovish, weighing on the USD. “The NZD faces competing tensions here, but believe resistance should hold for now,” analysts at ANZ explained.
Support 0.6620 Resistance 0.6720
NZD/USD levels
NZD/USD continues to trade below the doji and targets the 0.6620 level. If the bird can’t break the doji’s top at 0.6699 on a pullback, the case will be building for a sustained correction/reversal. However, risks are tilted to the downside targetting the 50% retracement at 0.6624 if the 21-D SMA breaks and price holds below – (A drop back into the downside opens a continuation risk towards 0.6500 that would open up 0.6344 and 0.6306 on the wide). On the upside, the pair needs to break 0.6711 as the 76.4% retracement of the daily downtrend from 0.7393.
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