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While NZD/USD traders search for clues to the pair’s inaction despite the strong New Zealand (NZ) Retail Sales, it’s better to point towards Wednesday’s Reserve Bank of New Zealand (RBNZ) monetary policy meeting as a catalyst.

As traders turn cautious ahead of the key event, amid mixed plays of upbeat data and reflation fears, Goldman Sachs (GS) expects inaction and a sustained dovish commentary during upcoming Wednesday’s RBNZ meeting.

It should, however, be noted that the GS may not refrain from better-than-expected recent economic performance and improved near-term fiscal position. The US bank also adds that the unemployment rate forecast will be revised lower,  but still show a near-term ‘bump’ in the path.

“There is a risk that the RBNZ update their path to show falls sustained declines in the unemployment rate,” said Goldman while expecting a rate hike during Q1 2021.

Read:  NZD/USD: Mildly offered below 0.7200 despite strong New Zealand Retail Sales print