So far this year, we’ve seen most of the big central bank decisions being relatively certain events. That’s not the case this week with the RBNZ.

The state of interest rates and monetary policy headed into this weeks RBNZ is somewhat mixed to say the least.

While a rate cut was a near formality only a few months ago, there appears to be a sense that this isn’t the case any more.

So far this year the RBNZ has cut rates all the way down to 1.0%. At this meeting, there is now a 65% chance that we’ll see a 25bp cut. While better than a coin flip, there are many out there who are suggesting this is far from a forgone conclusion.

Of recent times, we’ve seen some relatively flat data and also some comments from the board themselves pointing to the fact that they might not be cutting this time around.

Of course, we’ve already seen one big shock recently, when the RBNZ slashed rates by 50bp – a move no one predicted.

In reality, the RBNZ has been the most deceptive of all central banks recently.

As we know, monetary policy is also highly effective when these changes are not predictable. So that means that this week,, the NZD/USD could be in for a ride.

Regardless of the result, we will likely see some strong moves in the Kiwi, given the fact that there is a 65% chance of a cut and 35% of no change. Either way, price will follow through.

So far we are seeing the Kiwi trading around 0.6350. A cut would likely see that fall to 0.6250 and that might be a nice take profit area. To the upside, I still don’t we’d rally that far, but certainly, 0.6400 would be my main area of interest if the RBNZ are to remain on hold.

Either way, I think we should be in for some fireworks.