Central banks have been cutting rates left right and centre over the last few months and it looks like we could very well be on the verge of another rate cut in New Zealand.

The RBNZ have in fact, been one of the most aggressive central banks with their monetary policy as recently they slashed rates by a huge 50 bp to get the economy moving faster.

Since that point though, things have been far from poor in terms of the economic data that we’ve been seeing. Currently there is an 11-year low in the unemployment rate with wage growth ticking a little higher which is more than we can say for their neighbours in Australia.

Q2 GDP was better than some expected, but ultimately, did not impress everyone. This is where the weakness probably lies and it’s what leaves the door open.

As it stands, annual GDP growth is at a six-year low so many are now of the opinion that we will see a further rate cut based on that softness alone.

The RBNZ will likely be somewhat hesitant to hit in again, after what was a very much unexpected 50bp cut. Monetary policy takes time to filter through the economy and given the underlying strength in the jobs market, it would seem unlikely that there will be a cut this time around.

The NZD/USD has responded to the GDP print by selling off and there is also the possibility that a soft outlook in Australia is also weighing on the Kiwi.

Technically, price has broken through the key 0.6300 level and that means the door is open to an extended move. The current lows sit around 0.6250 and any further easing would almost certainly see that level taken out.

Being short beneath 0.6300 is not a bad trade, but I wouldn’t like to hold into the RBNZ meeting.