G20: what did the leaders decide?
The G20 summit took place in Bali, Indonesia, on November 2022…
RBNZ rate statement: what lies ahead for the NZD?
Information is not investment advice
The Reserve bank of New Zealand holds a meeting on Wednesday at 3:00 MT time. As usual, we await an update on the monetary policy and interest rate. Currently, the regulator keeps the rate at 0.25%. Analysts don’t expect any change to it, given current performance of New Zealand’s economy. Still, a dovish surprise is seen as a possible outcome.
Why the RBNZ may be dovish?
New Zealand has been showing pretty impressive post-Covid results. The country successfully handled the pandemic and released better-than-expected inflation figures for the fourth quarter of 2020 (0.5% vs. the forecast of 0.2%). These facts diminished the need in negative interest rates and took the NZ economy on track to a quick recovery. Still, the country has only just started the vaccination process, and the travel industry remains under pressure. Additionally to that, the RBNZ does not like rising bond yields and surging kiwi. The New Zealand dollar is trading at the highs of 2018 against the US dollar. Combined with the booming housing market, skyrocketing NZD worries policymakers.
Thus, the RBNZ may try to hold rising kiwi by highlighting existing risks from closed borders and late vaccination.
According to JP Morgan analyst, "We’ll hear from the RBNZ tonight and the risk for me is a dovish surprise, I will be looking to be short NZD into the meeting”
Another problem that might be in the focus of the RBNZ board is the QE limit. The bank might have bought as many government bonds as permissible. That’s why it might need to take unusual actions during the upcoming meeting.
The technical outlook for NZD/USD
The kiwi has been implementing a bullish pattern. Right now, it is trading near the resistance at 0.7350. If the RBNZ provides a dovish surprise, the pair will slide to 0.7150 with a high potential of a breakout. The next support will lie at 0.7010. If the resistance at 0.7350 is broken, the next key level will lie at 0.7430.
Similar
The End of Era: What Might the UK Face Next?
The deafening news shocked the whole world yesterday: the British Queen Elizabeth II died peacefully at the age of 96…
Why didn't oil prices calm despite OPEC+ attempts?
After months of pressure from the White House, Saudi Arabia relented and agreed with other OPEC+ members to increase production.
Popular
European Currencies Ahead of the Banks' Statements
On Thursday, the 2nd of February, the Bank of England will publish its report concerning interest rates and inflation data for the Eurozone. Professionals and investors anticipate that Andrew Bailey’s lead team of policy makers will likely raise interest rates to 4%; the highest in over a decade, for the tenth time in a row.
Will the FOMC Surprise the Markets?
The first FOMC meeting comes after a buildup of anticipation from traders and investors alike, as the markets await what posture the Fed will take regarding the interest rates; would there be a hike or a cut in interest rates? Recall that the Federal Open Market Committee had previously ended the year 2022 with a 50bps hike, and an indication from Powell, the committee chairman, that the Fed could consider raising interest rates by 75bps in the course of the year 2023.
What awaits the Oil Market in February?
Western countries are trying to find other options for oil and gas supplies after a 10th package of sanctions, which will put more pressure on Russian oil and decrease global oil supply. Italy, for example, is in talks with Libya.
Choose your payment system
