Will There Be More QE from the RBNZ Today?
Rowan Crosby • 2 min read
Risk has been a little on the nose this week, after a few weeks where the sentiment has certainly improved.
This has be no more obvious than in the NZD/USD which is a leading risk pair and has seen its gains stemmed of recent weeks.
That said, today we have the opportunity for more volatility as we hear from the RBNZ.
As with most of the major central banks, there is now no more room to move on official interest rates, however, the gun is still loaded on other fronts.
The expectation today is that the central bank will expand its QE program in a bid to insulate the country from the COVID-19 fallout. For the most part, the shutdown measure imposed by the Government have certainly stemmed the virus, however, the fallout economically is no doubt a reality. With borders likely to be closed for the foreseeable future, the Government and RBNZ are doing everything they can to prop up the struggling economy.
Clearly the outlook will be most valuable of all today, and with the expectation that rates will stay at current levels for the next 12 months, that will be a positive.
There is also the Government’s budget due out tomorrow and again that will be a messy one with billions wiped from the coffers thanks to all the stimulus. But in true Keynesian fashion, that might be seen as a positive as it could well help lift the economy out of the looming recession.
Technically, we can see that price is making an ascending flag type formation, highlighted by a series of higher lows.
0.6150 is really the upside resistance at this point, while to the downside a break of 0.6000 would be very bearish. Regardless of what the RBNZ might say today, playing those technical levels for a breakout trade, might be your best bet.