2019-11-11 • Updated
This week NZD/USD tested the lowest levels since October in the area of 0.6525 after the Reserve Bank of New Zealand reduced its interest rate to 1.5%. Then, however, the pair managed to return back 0.6580. Is the negative pressure from the rate cut already gone?
The RBNZ was the first out of G10 central banks to lower the rate. It was the first rate cut in New Zealand since November 2016. The regulator explained its decision by external risks such as the global economic growth slowdown and trade tensions. It also cited some domestic problems including decreased population growth, subdued house prices, rising unemployment, and falling household spending. In addition, business sentiment remains low and New Zealand’s companies struggle for profit. The last but not the least is the fact that inflation was weaker than expected in Q1: CPI growth accounted for 1.5% versus the forecast of 1.7%.
All in all, a rate cut wasn’t a big surprise for investors as everyone understood that the RBNZ will turn dovish in this kind of environment. The main question for the market now is whether the central bank will keep cutting rates this year or remain on hold from now on. Westpac says that a rate cut in August is more likely than in June, although the bank’s analysts expect the RBNZ to remain on hold until the middle of 2020. ANZ, on the contrary, says that May’s action of the central bank is only the first in the series and two more cuts will follow this year.
The regulator itself reduced the forecast for the Official Cash Rate (OCR) in June 2020 from 1.81% to 1.36%. Moreover, it reduced the inflation forecast for 2020 from 2.0% to 1.7% previously. Governor Orr said that a lower OCR is needed to support the outlook for employment and inflation consistent with its policy remit.
All in all, everything will depend on the incoming data. The next important releases are New Zealand’s retail sales on May 22, the nation’s trade balance on May 24, the RBNZ Financial Stability Report on May 29, and ANZ business confidence and annual budget release on May 30.
Technically, NZD/USD is squeezed between 0.6530 and 0.6630. On the upside, further levels to watch are 0.6690 (50% Fibo) and 0.6715 (200-day MA). Remember that the market is in the overall downtrend. Support is at 0.65 ahead of 0.6425.
Crude oil futures surged on Monday due to disruptions in Russian refining capacity caused by Ukrainian drone strikes and Moscow's decision to cut output to comply with OPEC+ targets. The West Texas Intermediate (WTI) contract for May settled at $81.95 a barrel, up $1.32, while the Brent contract for May settled at $86.57 a barrel, also up $1.32. Russia instructed...
Bearish scenario: Sales below 80.00 with TP1: 79.60... Anticipated bullish scenario: Intraday purchases above 80.70 with TP: 81.50...
Bearish Scenario: Sales below 78.99 with TP1: 77.93, TP2: 77.45, and upon its breakout TP3: 76.56 and TP4: 75.70 Bullish Scenario: Purchases above 78.00 (wait for a pullback to this area) with TP1: 1679.00 (uncovered POC*), TP2: 79.33, and TP3: 79.66 intraday
Jerome H. Powell, the Federal Reserve chair, stated that the central bank can afford to be patient in deciding when to cut interest rates, citing easing inflation and stable economic growth. Powell emphasized the Fed's independence from political influences, particularly relevant as the election season nears. The Fed had raised interest rates to 5.3 ...
Hello again my friends, it’s time for another episode of “What to Trade,” this time, for the month of April. As usual, I present to you some of my most anticipated trade ideas for the month of April, according to my technical analysis style. I therefore encourage you to do your due diligence, as always, and manage your risks appropriately.
Bearish scenario: Sell below 1.0820 / 1.0841... Bullish scenario: Buy above 1.0827...
FBS maintains a record of your data to run this website. By pressing the “Accept” button, you agree to our Privacy policy.
Your request is accepted.
A manager will call you shortly.
Next callback request for this phone number
will be available in
If you have an urgent issue please contact us via
Live chat
Internal error. Please try again later
Don’t waste your time – keep track of how NFP affects the US dollar and profit!
|
