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New Zealand dollar calm ahead of RBNZ rate decisionThe New Zealand dollar is trading quietly on Tuesday. In the European session, NZD/USD is trading at 0.6165, down 0.12%. All eyes are on the Reserve Bank of New Zealand, which will set the cash rate on Wednesday. The central bank is expected to hold rates at 5.50% for a sixth straight time. Most of the major central banks are looking to lower interest rates but the RBNZ is an outlier in that regard, warning that it could raise rates and the markets have price in a rate hike at Wednesday’s meeting at around 25%. The central bank finds itself in an uncomfortable position of high inflation coupled with weak growth. Inflation is running at a 4.7% clip, well above the 1%-3% target band. A rate hike would help push inflation lower but is risky in a weak economic climate as the economy could tip into a recession. Last week, retail sales for the fourth quarter fell by 1.9%, lower than expected and marking an eighth consecutive quarter of decline. GDP growth contracted in the third quarter by 0.3% and a second straight quarter of negative growth would meet the definition of a technical recession. RBNZ policy makers have pushed back against market expectations of a rate cut this year, insisting that it won’t lower rates until 2025. We can expect a hawkish message from the central bank at Wednesday’s meeting, even if the Bank decides to maintain rates at their current level. There is resistance at 0.6180 and 0.6236 0.6141 and 0.6085 are providing support
by OANDA
New Zealand dollar rises to five-week high, retail sales nextThe New Zealand dollar continues to gain ground and has extended its gains for a seventh straight day. In the North American session, NZD/USD is trading at 0.6187, up 0.12%. The New Zealand dollar last had a losing daily session on February 13 and has jumped 2.1% since then. New Zealand consumer spending has been weak and more bad news is expected on Friday, when retail sales for the fourth quarter will be released. Retail sales slipped 3.4% y/y in Q3 and the markets are bracing for another sharp decline of 3.6%. On a quarterly basis, retail sales haven’t shown a gain since Q3 of 2022 and the market estimate stands at 0.4%. The Reserve Bank of New Zealand will be keeping a close eye on the release, which is the last tier-1 event ahead of the policy meeting on February 28th. The minutes of the Fed’s January meeting didn’t contain any surprises. Fed members remained concerned about lowering interest rates too early and questioned “how long a restrictive monetary policy stance would need to be maintained”.  In other words, the “higher for longer” stance will remain in place for now. The most important consequence of this policy is that a March cut is off the table, with only a 5% likelihood, according to the CME’s FedWatch tool. The Fed’s uneasiness about lowering rates too early was reiterated by Fed Governor Michelle Bowman on Wednesday. Bowman said that the current economic climate was not conducive to a rate cut. Bowman has been hawkish on inflation and said last month that she would consider raising rates if inflation stalled or reversed and moved higher. NZD/USD tested resistance at 0.6211 earlier. Above, there is resistance at 0.6270 0.6168 and 0.6109 are providing support
by OANDA
New Zealand dollar rises on strong services dataThe New Zealand dollar continues to gain ground and has extended its gains for a fourth straight day. In the North American session, NZD/USD is trading at 0.6149, up 0.44%. New Zealand’s BusinessNZ Performance of Services Index improved to 52.1 in January from 48.8 in December, above the forecast of 49.6. This put the index in expansion territory and marked the highest pace of activity since July 2023. The 50 level separates contraction from expansion. This is welcome news for the economy, which has cooled down due the Reserve Bank of New Zealand’s steep rate-tightening cycle. Is the RBNZ done with raising rates? The markets think so and have priced a rate cut for the middle of the year. The central bank has been more cautious and has pushed back against these expectations. Governor Orr’s said last week that inflation expectations remain too high, the latest salvo aimed at dampening rate cut speculation. At its last meeting in November, the RBNZ said it hadn’t ruled out a rate hike and projected no rate cuts before mid-2025. New Zealand’s inflation rate is running at 4.7%, more than double the midpoint of the 1%-3% target range. The RBNZ is unlikely to trim rates until inflation falls much closer to 2% and unless inflation drops dramatically, a rate before late in the year is looking doubtful. The RBNZ meets next on February 28th and is expected to keep rates unchanged for a fifth straight time. NZD/USD is putting pressure on resistance at 0.6168. Above, there is resistance at 0.6211 0.6109 and 0.6066 are providing support
by OANDA
New Zealand job growth expected to reboundThe New Zealand dollar is showing limited movement on Tuesday. Early in the North American session, NZD/USD is trading at 0.6052, down 0.03%. New Zealand releases the fourth-quarter employment report later today. Employment is expected to rebound with a 0.3% gain, after a decline of 0.2% in the third quarter, which was the first decline in over three years. The unemployment rate is expected to rise to 4.2%, up from 3.9% in the third quarter. The Reserve Bank of New Zealand will be keeping a close eye on the job numbers as it charts its rate path. The RBNZ has kept the cash rate unchanged at 5.5% for five straight times, which likely means that its steep rate-tightening cycle has run its course. That has the markets hunting for clues of a rate cut, which is expected later in the year. At the most recent meeting in late November, the RBNZ had a hawkish message for the markets, warning that inflation remained too high and if it rose unexpectedly, the central bank would "likely need to increase further". I'm doubtful that the RBNZ is really planning to raise rates, barring a shock where inflation moves higher. The RBNZ's aim may be to pour cold water on rate-cut expectations and allow high rates to continue to push inflation lower. If key data such as the upcoming employment report are solid, it will provide the RBNZ with more room to continue to keep rates in restrictive territory. Conversely, weak job numbers would raise pressure on the RBNZ to lower rates in order to boost economic growth. NZD/USD is putting pressure on resistance at 0.6150. Above, there is resistance at 0.6211 There is support at 0.6054 and 0.5993
by OANDA
NZD/USD eyes RBNZ rate meetingThe New Zealand dollar posted slight gains earlier on Tuesday but has recovered. In the European session, NZD/USD is trading at 0.6101, up 0.07%. The Reserve Bank of New Zealand meets on Wednesday and is likely to maintain the cash rate at 5.5% for a fourth straight time. The central bank's stance appears to be one of "higher for longer", which will provide policy makers the flexibility to raise or lower rates as needed. The RBNZ's stance does not dovetail with the market view that rate cuts could come as early as May 2024. Inflation is falling and the labor market is slowing down, and the markets are betting that this trend will continue and allow the RBNZ to trim rates. This makes Wednesday's meeting quite interesting, not so much as to the rate decision but to how strongly Governor Orr pushes back against market expectations of rate cuts. The RBNZ said in October that rates might need to stay higher for longer in order to bring inflation back down to the 1%-3% target, but a more forceful message may be needed to send the message that rate cuts are not around the corner. Orr's press conference and updated forecasts will be opportunities to counter market expectations and present a hawkish stance on rate policy. The US releases Conference Board Consumer Confidence later today. Consumer confidence has been falling and the downtrend is expected to continue, with a market consensus of 101.0, down from 102.6. We'll also hear from a host of Fed members during the day, which could provide some insights into the Fed's plans for the December meeting. NZD/USD is putting pressure on resistance at 0.6121. Above, there is resistance at 0.6167 There is support at 0.6053 and 0.5996
by OANDA
NZD/USD rises ahead of retail salesThe New Zealand dollar is in positive territory on Thursday. Early in the North American session, NZD/USD is trading at 0.6042, up 0.34%. Retail sales are a key gauge of consumer spending and the New Zealand consumer has been holding tightly to the purse strings. In the second quarter, retail sales fell 1% q/q, with most retail industries showing lower sales volumes. This marked a third consecutive losing quarter. The markets are bracing for another decline for Q3, with a consensus estimate of -0.8%. The soft retail sales data isn't really surprising as consumers are being squeezed by high inflation and elevated borrowing costs. The decrease in household purchasing power has meant a decline in spending. High interest rates are still filtering through the economy, which could further dampen consumer spending in the fourth quarter. The Reserve Bank of New Zealand has put a pause on rates for three straight times, which has naturally raised speculation that the central bank has completed its tightening cycle, which has brought the cash rate to 5.5%. Inflation in the third quarter eased from 6.0% to 5.6% y/y in the third quarter and this decline means that there is a strong likelihood that the RBNZ will hold rates at the November 27th meeting. US markets are closed for the Thanksgiving holiday, which means we're unlikely to see much movement today with the US dollar. That could change on Friday, with the release of US manufacturing and services PMIs. The consensus estimates for November stand at 49.8 for manufacturing (Oct: 50.0) and 50.4 for services (Oct. 49.8). If either of the PMIs miss expectations, that could translate into volatility from the US dollar. NZD/USD Technical NZD/USD is putting pressure on resistance at 0.6076. The resistance line 0.6161 There is support at 0.5996 and 0.5885
by OANDA
NZD slides against the Japanese YenThe New Zealand Dollar (NZD) is trading bearish against the Japanese Yen (JPY) at 87.386 on Friday, October 27, 2023, following comments from Japan's Chief Cabinet Secretary Taro Matsuno that the Bank of Japan (BoJ) is expected to conduct appropriate monetary policy. Matsuno's comments come amid rising expectations that the BoJ will eventually tighten monetary policy in response to rising inflation in Japan. The BoJ has been maintaining an ultra-loose monetary policy stance for many years, but this has led to a significant weakening of the JPY in recent months. The NZDJPY currency pair has been under pressure in recent weeks as investors have priced in the possibility of a more hawkish BoJ. The pair has fallen by over 5% since the start of October. The bearish outlook for NZDJPY is further supported by the technical outlook. The pair has broken below a key support level at 88.00, and is now on track to test the next support level at 86.50. Factors Weighing on NZDJPY There are a number of factors weighing on NZDJPY at present, including: Expectations of BoJ tightening: The BoJ is expected to be one of the last major central banks to tighten monetary policy, which is putting downward pressure on the JPY. Rising inflation in Japan: Japan's inflation rate has been rising in recent months, which is putting pressure on the BoJ to tighten monetary policy. Global risk aversion: Global investors are currently risk averse, which is leading to a sell-off in riskier assets such as the NZD. Weak New Zealand economic data: The New Zealand economy has been slowing in recent months, which is weighing on the NZD. Technical Outlook for NZDJPY The technical outlook for NZDJPY is bearish. The pair has broken below a key support level at 88.00, and is now on track to test the next support level at 86.50. If NZDJPY breaks below 86.50, it could fall to 85.00 or even lower. Trading Strategy Traders who are bearish on NZDJPY could consider shorting the pair at current levels. A stop loss could be placed above the recent high at 88.00. A profit target could be placed at 86.50 or 85.00. It is important to note that the foreign exchange market is volatile and prices can move quickly. Traders should always use risk management techniques when trading currencies.
Short
by masterclass618
NZ dollar sliding, RBNZ expected to pauseThe New Zealand dollar is sharply lower for a second straight day. In the North American session, NZD/USD is trading at 0.5904, down 0.71%. It has been an awful week so far for the New Zealand dollar, which is down 1.55%. NZD/USD tends to have a positive correlation with AUD/USD and the Aussie fell sharply today after the Reserve Bank of Australia held rates for a fourth straight time. That move was widely expected, but the Australian dollar is also getting squeezed by a strong US dollar and higher US Treasury yields and the pause hasn't made the Aussie any more attractive to investors. The Reserve Bank of New Zealand follows with its rate decision on Wednesday and is expected to maintain the cash rate at 5.5%. If the RBNZ does pause, it would be for the third straight time and that could weigh on the New Zealand dollar, as was the case with the Australian currency which has fallen sharply today. I don't foresee RBNZ policy makers acknowledging that rates have peaked, but that will likely be the market's take if the RBNZ does opts for a pause on Wednesday. With interest rates extremely high, households are groaning and the central bank would certainly want to provide a bit of relief by not tightening any further. The primary problem for the RBNZ is of course inflation. The New Zealand economy is getting squeezed by weak domestic consumption and reduced global demand for exports. The central bank has projected a recession, and an end to tightening would be appropriate if it weren't for inflation running at a 6% clip in the second quarter, double the upper band of the 1-3% target range. Inflation could decline more quickly as the economy cools, but the key question is how long the central bank is willing to wait for inflation to fall before hiking again. NZD/USD is testing support at 0.5916. The next support line is 0.5833 There is resistance at 0.5982 and 0.6065
by fisherkj4
New Zealand dollar rises despite soft Services PMIThe New Zealand dollar has started the week in positive territory. NZD/USD is trading at 0.5918 in the North American session, up 0.34%. New Zealand's Services PMI eased to 47.1 in August, down from 47.8 in July. The reading marked a third straight decline in activity and was the lowest level since January 2022. This comes on the heels of Friday's Manufacturing PMI, which fell to 46.1 in August, down from 46.6 a month earlier. This was the sixth consecutive month of contraction (the 50.0 line separates contraction from expansion). The Reserve Bank of New Zealand has been forecasting a recession and the weak PMIs support this view. New Zealand's economy has cooled down due to the central bank's steep tightening and global demand has weakened, most notably with China experiencing a slowdown and deflation. The RBNZ paused at the August meeting and interest rates may have peaked. If economic data remains weak, I would expect the RBNZ to prolong the pause at next month's meeting. The US ended last week with mixed releases. The Empire State Manufacturing Index surprised and jumped to 1.9 in September, up from -19 in August and above the market consensus of -10. The UoM consumer sentiment index slowed to 67.7 in September, down from 69.5 in August and shy of the market consensus of 69.1 points. Inflation Expectations fell to 3.1% in August, down from 3.5% in July and the lowest level since March 2021. This is another sign that inflation is weakening and supports a pause at the Federal Reserve meeting on Wednesday. The markets have priced in a pause at 99%, according to the CME FedWatch tool, up from 92% one week ago. NZD/USD is testing resistance at 0.5908. The next resistance line is 0.5936 There is support at 0.5871 and 0.5843
by OANDA
Post RBNZ AnalysisThe RBNZ announced its decision to keep interest rates on hold at 5.50%, keeping with market expectation. In the accompanying statement, the RBNZ indicated that rates could remain restrictive in the long term as inflation rate continues to be "too high". This has also led to an increased likelihood for another rate hike to come from the RBNZ. Following the release of the decision, the NZDUSD rose from the 0.5940 price level and continued to climb higher toward the resistance level of 0.5990. This move higher was supported by the weakening of the DXY during the Asia session. Further weakness in the DXY could drive the NZDUSD higher, with the bearish trendline and 38.2% Fib retracement level likely to provide resistance, before a resumption of the downtrend.
Short
by JinDao_Tai
AUD/NZD to benefit from yield differentials? A strong 2-day rally this week suggests AUD/NZD has printed its swing low at 1.07266. Whilst NZ inflation data was stronger than expected in Q2 and saw AUD/ZD pull back to 1.0800, we suspect it is still lower from the prior reads to allow the RBNZ to hold rates steady with an economy already in a recession. We therefore see today's retracement lower to 1.080 as a potential gift for bulls, and for a move to 1.0900 or even 1.1000 over the coming weeks. The RBA may still have to hike once or more and that could see expectations of a lower RBNZ-RBA cash rate and support AUD/NZD. A break beneath this week's low invalidates the bullish bias.
Long
by CityIndex
NZD/USD dips ahead of RBNZ rate decisionThe New Zealand dollar is lower on Tuesday. In the European session, NZD/USD is trading at 0.6189, down 0.35%. The Reserve Bank of New Zealand will be in the spotlight on Wednesday. The central bank holds its policy meeting and is expected to leave the official cash rate unchanged at 5.5%. The RBNZ has raised rates 12 consecutive times since August 2021 but has signalled that it's time for a breather. Shortly after the May hike, Deputy Governor Hawkesby said that there would be a "high bar" for the RBNZ to continue raising rates.  The RBNZ won't be issuing a rate statement and there may not be much for the markets to digest other than the expected pause. The decision to pause is certainly not a no-brainer, given current economic conditions. Inflation is running at 6.7%, more than triple the Bank's target of 2% and the labour market remains tight. At the same time, demand has slowed and economic activity has cooled as the RBNZ's relentless rate hikes filter through the New Zealand economy. RBNZ policymakers are confident that the economy has cooled and inflation, although high, is on the right path. If inflation continues to fall, there is a good chance that the pause could be extended - the central bank would clearly like to wrap up the current rate-tightening cycle, and unlike what we saw when the Fed took a pause, there are no signals to the markets that this pause will be a one-time occurrence. New Zealand releases Manufacturing PMI for June on Wednesday after the rate decision. The manufacturing sector has contracted for three straight months, with readings below the 50.0 line, which separates contraction from expansion. The PMI is expected to rise from 48.9 to 49.8, which would point to almost no change. NZD/USD tested support at 0.6184 earlier. Below, there is support at 0.6126 0.6260 and 0.6383 are the next resistance lines
by OANDA
AUDNZD Potential UpsidesHey Traders, In today's trading session, we are paying close attention to the AUDNZD currency pair, as we believe there might be an opportunity to buy around the 1.09600 zone. From a technical standpoint, AUDNZD is currently in an uptrend but experiencing a corrective phase. It is approaching a significant support zone around 1.09600, which adds to its appeal as a potential buying opportunity. From a fundamental perspective, it's worth noting that the Reserve Bank of Australia (RBA) is still in the process of gradually raising interest rates. This indicates their intention to tighten monetary policy in order to manage the economy. On the other hand, the Reserve Bank of New Zealand (RBNZ) has officially halted any further rate hikes, suggesting a more stable or potentially looser monetary policy approach. Considering both the technical and fundamental factors, the current market conditions suggest that the AUDNZD pair could present an attractive buying opportunity near the 1.09600 support zone. Trade safe, Joe.
Long
by JoeChampion
8
NZDCAD 29/MAY/2023The Reserve Bank of New Zealand (RBNZ) recently made a decision to raise interest rates. Normally, when a country raises its interest rates, it tends to strengthen its currency. in this case, the opposite happened in this situation. The price of the New Zealand dollar actually went down because of a dovish statement from the RBNZ. A dovish statement means that the central bank (RBNZ) expressed concerns about the economy uncertainty, causing it to decline in NZD value against other currencies. NZDCAD has formed a bearish channel, which suggests a downward trend in the NZD's value. Given the support area and the bearish channel, there is a possibility that the price of the New Zealand dollar will rebound or increase in value in the near future. Traders and investors will be closely watching this support area to see if the NZD's price bounces back from there. There are several geopolitical, economic, and fiscal policy issues that could potentially impact the rebound of the New Zealand dollar and even push it to drop further. These factors are particularly relevant in light of the dovish statement from the RBNZ. Geopolitical events, such as trade disputes, political instability, or global conflicts, can have a significant impact on currency values. If there are geopolitical tensions or uncertainties that affect New Zealand's trade relationships or create instability in the region, it could put downward pressure on the New Zealand dollar. Economic factors also play a crucial role. If there are indications of a weakening New Zealand economy, such as lower-than-expected GDP growth, rising unemployment, or a decline in consumer spending, it could negatively impact the NZD's value. If there are concerns about inflation exceeding expectations or a deterioration in the overall economic outlook, it could lead to a further decline in the currency. Fiscal policy decisions by the New Zealand government can also influence the currency. If there are indications of expansionary fiscal policies, such as increased government spending or tax cuts, it could stimulate economic growth and potentially support the New Zealand dollar. Conversely, if there are concerns about fiscal austerity measures or a lack of government support for the economy, it could undermine the currency's rebound. Furthermore, any additional dovish statements or actions from the RBNZ could reinforce the downward pressure on the New Zealand dollar. If the central bank continues to express concerns about the economy, hinting at further interest rate cuts or unconventional monetary policy measures, it could erode market confidence and lead to a deeper drop in the NZD's value. The currency market is influenced by a complex interplay of various factors, and predicting its movements with certainty is challenging. Traders and investors should carefully monitor geopolitical developments, economic indicators, and fiscal policy decisions, along with any further statements from the RBNZ.
Long
by DNP-FX
2
NZD/USD unchanged ahead of New Zealand retail salesThe New Zealand dollar is coming off a strong week, with gains of 1.36%. In Monday's North American session, NZD is unchanged, trading at 0.6274. New Zealand releases retail sales on Tuesday. The central bank's tightening has hampered consumer spending and the markets are bracing for a decline in retail sales for the first quarter. Headline retail sales are expected at -0.4%, after -0.6% in Q4 2022. The core rate is projected to decline by 0.6%, following -1.6% in Q4. The retail sales report will be followed by the Reserve Bank of New Zealand's rate decision on Wednesday. The markets have priced in a modest 25-basis point hike, which would be the smallest increase since February 2022, when the central bank raised rates from 0.75% to 1.00%. The central bank has not been shy about tightening, with the benchmark cash rate currently at 5.25%. Inflation in March from 7.2% to 6.7% on an annualized basis, more than double the upper range of the 1-3% target. The RBNZ is unlikely to wind up the current rate-tightening cycle before inflation drops substantially. There was some positive news earlier in the month, as inflation expectations eased in the first quarter to 2.79%, down from 3.30% in the previous quarter. This may have cemented a 25-bp hike on Wednesday, as the central bank pays close attention to inflation expectations, which if embedded can lead to higher inflation. Fed Chair Jerome Powell said on Friday that the banking sector turmoil could mean that the Fed will not have to raise rates "as much as it would have otherwise". Powell reiterated that inflation remained too high and future rate decisions would depend on data. The takeaway from Powell's remarks is that we could be close to the end of the current rate-hike cycle, but inflation will have to cooperate and move lower to the 2% target. NZD/USD is putting pressure on support at 0.6256. Below, there is support at 0.6207 0.6326 and 0.6375 are the next resistance lines
by OANDA
1
New Zealand Dollar higher ahead of employment dataNZD/USD is considerably higher on Tuesday, trading at 0.6203, up 0.57%. Earlier, NZD/USD rose as high as 0.6218, its highest level since April 19th. New Zealand's labour market has remained robust, despite relentless tightening from the Reserve Bank of New Zealand, which has raised rates to 5.25%. We'll get a look at first-quarter employment numbers later today, with the markets expecting solid numbers. The unemployment rate is projected to come in at 3.5%, a touch above the 3.4% rate in Q4 of 2022. Employment change is expected at 0.4%, following a Q4 read of 0.2%. The RBNZ would like to see the labour market weaken in order to hasten the fall of inflation, which remains its number one priority. The central bank will also release the Financial Stability Report later today, which will provide insights into the Bank's take on inflation and growth. Investors will be looking for hints on rate policy, with the RBNZ meeting next on May 24th. Policy makers would like to pause rates and provide households with a bit of relief, but that will depend on the data, including inflation expectations which will be released next week. The Fed meets on Wednesday and a 25-basis point hike is widely expected, with a 93% probability according to the CME Group. The banking crisis, which reappeared with First Republic Bank's shares plunging, is off the radar for now after JP Morgan agreed to purchase First Republic's assets. Still, credit conditions have tightened, which is estimated to be equivalent to a Fed hike of 25 or perhaps 50 basis points. That fallout is unlikely to prevent a Fed hike on Wednesday but could well lead the Fed to wind up its current tightening cycle earlier than anticipated. NZD/USD tested resistance at 0.6209 earlier today. Above, there is resistance at 0.6332 0.6133 and 0.6072 are the next support levels
by OANDA
NZDUSD Outlook 6th April 2023The NZDUSD spiked up yesterday as the RBNZ surprised markets with a 50bps rate hike (the forecast was for 25bps). With the interest rates now at 5.25%, it is just 25bps shy of the peak rates of 5.50% previously indicated by the RBNZ. Following the spike up, the NZDUSD retraced the move to trade below 0.63 again (due to the overnight recovery of strength on the DXY). With the support level at 0.6270 coinciding with the 61.8% fib level, this could be a crucial level. A break of the support could see the NZDUSD trade lower to retest the 0.6240 price level (the upward trendline)
Short
by JinDao_Tai
NZD/USD surges briefly after RBNZ hikes by 50 basis pointsThe New Zealand dollar is showing sharp movement on Wednesday after the Reserve Bank of New Zealand shocked the markets and raised rates by 50 basis points. In the US, JOLTS Jobs Openings was below expectations, raising concerns about the strength of the US labour market. In the European session, NZD/USD is trading at 0.6296, down 0.24%. The RBNZ gets the prize for shocker of the week, after the central bank delivered a 50-bp hike, bringing the benchmark cash rate to 5.25%. Most analysts were expecting a modest 25-bp increase and ahead of the decision, the markets had priced in such a move at a massive 86%. The New Zealand dollar climbed over 1% following the decision, but has pared all of the gains and fallen into negative territory. The RBNZ statement noted that inflation remains too high, and there's no arguing that point, as CPI was unchanged in the fourth quarter at 7.2%. The reason that the markets were completely blindsided was that the economy is sputtering. GDP declined by 0.6% in the fourth quarter. The uncertain global outlook doesn't bode well for the export-dependent economy, and high interest rates and red-hot inflation are hurting domestic demand. This writer suggested yesterday that it seemed a sensible time for the RBNZ to take a breather, but instead, the Bank pushed the rate pedal down even harder than expected. In the US, a soft JOLTS Job Openings release has the markets abuzz about the strength of the US labour market. JOLTS slipped to 9.93 million, down from 10.56 million and its lowest level since May 2021. The nonfarm payrolls report on Friday will have added significance, as a soft reading would put pressure on the Fed to take a pause at its meeting in May. NZD/USD tested resistance at 0.6362 earlier. Above, there is resistance at 0.6425 0.6308 and 0.6245 are providing support
by OANDA
NZD/USD in holding pattern ahead of Reserve Bank decisionThe New Zealand dollar is almost unchanged ahead of the Reserve Bank of New Zealand (RBNZ) rate decision on Wednesday (New Zealand time). The US releases JOLTS Job Openings. NZD/USD is trading quietly at the 0.63 line in the European session. The RBNZ is widely expected to raise rates by 25 basis points, which would bring the benchmark cash rate to 5.0%. Over the past year, the RBNZ has delivered oversize hikes of 50 and even 75 basis points, marking an aggressive rate-tightening cycle in order to contain red-hot inflation. The battle with inflation has been slow, as CPI came in at 7.2% in Q4 2022, unchanged from the third quarter. The sharp rise in rates and weak global demand have battered the New Zealand economy. GDP declined by 0.6% in Q4 2022, and the cyclone in February will have a negative impact on GDP for Q1. This backdrop supports the RBNZ taking a break from its relentless rate hikes at the upcoming meeting. In February, the RBNZ projected a terminal rate of 5.50%, but with the economy showing signs of strain, the central bank might end the current cycle at 5.25%, especially if inflation heads south. We could even see a rate cut before the end of the year. In the US, the highlight of the week is nonfarm payrolls on Friday. After a better-than-expected reading of 311,000 in March, the consensus estimate stands at 240,000 which is still decent. The Fed will be looking at nonfarm payrolls as an important factor in its rate decision in May. Currently, the odds of a 25bp increase are at 59% and a pause at 39%, according to the CME Group. This week's employment releases kick off with JOLTS Job Openings later today. The estimate stands at 10.49 million, following the prior reading of 10.82 million. NZD/USD tested resistance at 0.6310 earlier in the day. Above, there is resistance at 0.6362 0.6245 and 0.6127 are providing support
by OANDA
Potential bear flag on NZD/USDThe combination of hawkish Fed speak and firmer inflation has seen the US dollar strengthen overnight. But we're interested in shorting the Kiwi dollar against it, given yesterday's lower forecasts for 2 and 3-year inflation forecasts by RBNZ. It should be noted that RBNZ hold their monetary policy meeting on Wednesday February the 22nd, and there has been call for a 50 or 75bp hike. But that doesn't mean it can't dip lower ahead of the meeting, even if they do go for another aggressive hike - especially if Fed members continue to read from the same hawkish script. NZD/USD has spent nearly 7 days within a sideways channel / consolidation, after an aggressive bearish reversal from its YTD high. A double top has formed around 0.6400 to suggest demand resides in the area, so the bias is now for a bear-flag breakout in line with the momentum which took it into consolidation. - Bears can either seek a break of the cycle low, or the channel around 0.6294 to assume bearish continuation. - The lows around 0.6200 make a likely target for bears and risks a corrective bounce - The eventual target projected form the bearish flag is around 0.6120
Short
by CityIndex