NZD/USD Dives Back Down After False Bullish Breakout, RBNZ on Sidelines
Since July, the NZD has been slipping lower as commodity dollars have declined due to the USD moving higher, as well as China’s economy showing considerable deterioration in various areas, despite some improvement in recent weeks. This has been keeping risk sentiment negative. The US economy, on the other hand, has demonstrated resilience, with employment sectors continuing to show strength, indicating that the labor market is in good shape.
On the daily chart, the NZD/USD slipped below the big round level at 0.60, where it formed a support zone in the last two weeks. We even saw a retrace all the way back above the important resistance level of 0.60 last week ahead of the US PCE price index report, hitting o.6050 as the sentiment improved. But the 50 SMA (yellow) held as resistance on this timeframe and we saw a reversal back down, which has sent this pair more than 150 pips lower, below 0.59.
Earlier today we had the Reserve Bank of New Zealand meeting which wasn’t expected to produce much, since they have already stopped raising interest rates. So, they confirmed that, keeping the cash rate at 5.50% and the NZD had the same reaction as the AUD had yesterday after the RBA also left rates unchanged.
Reserve Bank of New Zealand Meeting October 4
- RBNZ leaves its cash rate target unchanged at 5.50%, as expected
- Demand growth in the economy continues to ease.
- Committee agreed that the OCR needs to stay at a restrictive level
- Interest rates are constraining economic activity and reducing inflationary pressure as required
- While GDP growth in the June quarter was stronger than anticipated, the growth outlook remains subdued.
- With monetary conditions remaining restrictive, spending growth is expected to decline further
- Near-term risk that activity and inflation do not slow as much as needed
- Prolonged period of subdued activity is required to reduce inflationary pressure
- Committee agreed that interest rates may need to remain at a restrictive level for a more sustained period of time
- Committee noted inflation is still expected to decline to within the target band by the second half of 2024
- Committee noted inflation is still expected to decline to within the target band by the second half of 2024
- Recent indicators show that employment intentions are flat and difficulty in finding labour has reduced
- Over the medium term committee agreed downside risks around the outlook for global growth remain
NZD/USD Live Chart
ABOUT THE AUTHOR
See More
Sidebar rates
Related Posts
SaveAdd 3440
Join 350 000+ traders receiving Free Trading Signals
Alerts
Rates
Calendar
Signals