After a very long preparation, which also included assistance from the government, the Reserve Bank of New Zealand raised the interest rate from 2.50% to 2.75%. This was no surprise, and some market analysts suspected that NZD/USD would fall in a “buy the rumor, sell the fact” reaction. However, as the RBNZ hinted more rate hikes than expected, the kiwi rallied to levels last seen nearly one year ago. Is this just the beginning of a bigger rally? Here is the rally in the daily chart, which shows the extent of the move: First, the statement included a clear intent of making more rate hikes by saying that it is “commencing” the adjustment. The speed and the extent will depend on incoming data, but more hikes are imminent. In addition, the RBNZ released a forecast reaching up to 2017, and hinted about a peak rate of 5%, higher than 4.50% expected. The road is still long if we assume hikes of 0.25% each time, but it could come faster. Coming back to 2014, analysts in New Zealand upgraded their forecasts for hikes during the current year. An interest rate of 3.75% by year end would come as no surprise now, but the shift in expectations certainly surprised markets. Here are key quotes from the announcement: New Zealand’s economic expansion has considerable momentum, and growth is becoming more broad-based. GDP is estimated to have grown by 3.3 percent in the year to March. … While headline inflation has been moderate, inflationary pressures are increasing and are expected to continue doing so over the next two years. In this environment it is important that inflation expectations remain contained. To achieve this it is necessary to raise interest rates towards a level at which they are no longer adding to demand. The Bank is commencing this adjustment today. The speed and extent to which the OCR will be raised will depend on economic data and our continuing assessment of emerging inflationary pressures NZD/USD The kiwi made a decisive move above 0.85, which was a battle line recently, but didn’t stop there. After settling around 0.8520, it extended the move in the Tokyo session up to the vicinity of 0.8560. When European traders joined, a new peak of 0.8578 was hit. NZD/USD is now above the October 2013 high of 0.8544 and practically met resistance at the minor line of 0.8586, which capped the pair in April 2013. The 2013 peak of 0.8676 is already stronger resistance. A consolidation of the move could send the pair to support at 0.8544, followed by the round 0.85 level. For more lines, events and analysis, see the NZDUSD forecast. 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. Yohay's Google Profile View All Post By Yohay Elam Forex News Today: Daily Trading News share Read Next EUR/USD March 13 – Euro Sets Sights On 1.40 Kenny Fisher 9 years After a very long preparation, which also included assistance from the government, the Reserve Bank of New Zealand raised the interest rate from 2.50% to 2.75%. This was no surprise, and some market analysts suspected that NZD/USD would fall in a "buy the rumor, sell the fact" reaction. However, as the RBNZ hinted more rate hikes than expected, the kiwi rallied to levels last seen nearly one year ago. Is this just the beginning of a bigger rally? Here is the rally in the daily chart, which shows the extent of the move: First, the statement included a clear… Regulated Forex Brokers All Brokers Sponsored Brokers Broker Benefits Min Deposit Score Visit Broker 1 $100T&Cs Apply 0% Commission and No stamp DutyRegulated by US,UK & International StockCopy Successfull Traders 9.8 Visit Site FreeBets Reviews$100Your capital is at risk.2 T&Cs Apply 9.8 Visit Site FreeBets Reviews$100Your capital is at risk.3 Recommended Broker $100T&Cs Apply No deposit or withdrawal feesTrade major forex pairs such as EUR/USD with leverage up to 30:1 and tight spreads of 0.9 pips Low $100 minimum deposit to open a trading account 9 Visit Site FreeBets ReviewsYour capital is at risk.4 T&Cs Apply Visit Site FreeBets ReviewsYour capital is at risk.5 Recommended Broker $0T&Cs Apply Trade gold, silver, and platinum directly against major currenciesUp to 1:500 leverage for forex trading24/5 customer service by phone and email 9 Visit Site FreeBets ReviewsYour capital is at risk.