USDNZD, Daily
The Reserve Bank of New Zealand (RBNZ) is widely expected to keep the OCR (Official Cash Rate) at the current record low 1.50%, when they announce their decision at 02:00 GMT on Wednesday. The OCR is the means by which the RBNZ manages monetary policy for the New Zealand economy, by lending overnight cash at 25 basis points above the OCR, and receiving deposits and paying interest at 25 basis points below the OCR.
The cut at their last meeting (May 8) was also widely anticipated, following the increase in “easing bias” from Governor Orr and other members of the RBNZ board that had been gaining momentum for a number of months. New Zealand is an export-driven economy with commodities (particularly soft commodities) accounting for 40% of all exports, with key neighbours Australia and China being vital markets. This puts increased emphasis on a competitive exchange rate.
Following a prolonged move down, the NZDUSD bounced from a double bottom low at 0.6490 after last week’s announcement from the FOMC. The move has stalled, ahead of the RBNZ, at the 38.2 Fibonacci level and key round number at 0.6550. A breach of the June high at 0.6680 could see further moves to the 50.0 Fibonacci and 200-day Moving Average resistance zone at 0.6700-20. Support sits at the 50-day moving average and psychological 0.6600 and 0.6500.
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Stuart Cowell
Head Market Analyst
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