Search ForexCrunch

The Reserve Bank of New Zealand left the interest rate  unchanged at 3.50% but certainly surprised with optimism about economic growth and with  leaving the hiking bias.

NZD/USD jumped up and certainly held onto high ground.

While the next policy moves depend on data, the  RBNZ does see an interest rate rise at a later stage. This is  because domestic demand has retained momentum.

And the numbers: GDP growth for 2014 was revised up  from 3.1% to 3.2% and growth is expected to pick up to 3.5% in 2015.  Also the outlooks for 2016 and 2017 now see a growth rate of over 3%.

Given the recent global gloom, the fear of deflation in some areas and the fall in oil prices (which is viewed as a positive by the Bank), some had expected that the RBNZ would remove its hiking bias  and either remain neutral or even tend to cut the rates later this year.

On the other hand, the demand for workers in New Zealand and the demand for dairy products, despite a drop in prices, remains high. The same goes for  house prices in Auckland, that is a source of concern for Wheeler and co.

The RBNZ left its  expectations regarding NZD unchanged: it sees more falls. But this isn’t new and the currency certainly took a different direction.

NZD/USD jumped above resistance at 0.7765 and continued above 0.78. The chart shows a clear break to the upside:

NZDUSD jumps after optimistic RBNZ decision December 11 2014 New Zealand dollar on the rise


For more, see the NZDUSD prediction