The Reserve Bank of New Zealand has already cut interests rate three times this year with the most recent cut being in August. Back in August the Bank of New Zealand cut rates by 50 basis points. The drastic cut shocked the Markets because the Markets were only a 25 basis point reduction. At that time, Reserve Bank Governor Adrian Orr hinted at further easing by any means necessary in order to hit their inflation rate targets.
Twelve out of 15 analysts polled by Reuters expected the Reserve Bank of New Zealand (RBNZ) would cut rates to 0.75% this week from the current 1%. However, nobody saw it coming yesterday evening.
The New Zealand dollar surged Wednesday after the country’s central bank defied expectations for an interest rate cut, and left policy unchanged. The kiwi dollar NZDUSD, +1.2954% jumped 1.1% to 0.6402 U.S. cents. In a statement, the Reserve Bank of New Zealand said at it was leaving the Official Cash Rate at 1% as economic developments since August “do not warrant a change to the already stimulatory monetary policy setting at this time.”
Expectations had widely been calling for a cut of 25 basis points, said Ipek Ozkardeskaya, senior market analyst at London Capital Group, in a note to clients.
The RBNZ left the door ajar for further policy easing saying it was “prepared to act” if required. The central bank’s own projections imply a 50/50 chance of a cut next year.
So where is the Kiwi headed next, lets go to the charts?
Monthly Chart (Curve Time Frame) – monthly supply is 0.7600 and monthly demand is 0.6300
Weekly Chart (Trend Time Frame) – the trend is still down.
Daily Chart (Entry Time Frame) – the chart suggests you can’t consider going long until price closes above 0.6450.
This post is my personal opinion. I’m not a financial advisor, this isn’t financial advise. Do your own research before making investment decisions.