RBNZ

The RBNZ took the safe option in delivering a 50bps cut, but hawkish signals have traders buzzing. Can NZD/USD sustain its breakout momentum, or will the US dollar reclaim control?

The consensus is 50bp, market pricing leans towards 75bp. Whatever the RBNZ decide to do today, it comes down to whether they will signal further cuts, as to whether NZD/USD continues to depreciate or bounce on a "sell the rumour, buy the fact" reaction.

NZD/USD bounces back ahead of the 2023 low (0.5774) to keep the Relative Strength Index (RSI) above 30.

New Zealand’s economy is crawling despite aggressive rate cuts, leaving the RBNZ staring down a crucial decision: play it safe or unleash Adrian Orr’s hallmark “shock and awe” with a bold move next week. Could a 75bp cut be the surprise markets aren’t ready for?

NZD/USD rises despite soft jobs data, with risk of mega RBNZ cut remaining on the table. US Congress composition now key to near-term Kiwi moves.

New Zealand consumer price inflation (CPI) fell to the lowest level since early 2021 in the September quarter, seeing markets retain the view the Reserve Bank of New Zealand (RBNZ) will deliver another jumbo rate cut in November. NZD/USD has moved back towards range lows ahead of another key inflation measure.

The Reserve Bank of New Zealand (RBNZ) has joined the Federal Reserve in the jumbo rate cut club, slashing its cash rate by 50 basis points to 4.75% at the conclusion of its October monetary policy decision. NZD/USD is testing the 200-day moving average in the wake of the decision, a level that one glance tells you is important from a directional risk perspective.

NZD/USD is on the cusp of testing the September low (0.6107) as it slips to a fresh monthly low (0.6108).

The bullish NZD/USD breakout flagged last week has come to fruition with the trade target of .6150 reached. With the price holding around the level, we look at potential trades ahead of key events including Jerome Powell’s appearance before the US Senate on Tuesday, the RBNZ interest rate decision on Wednesday and key US inflation data on Thursday.

New Zealand is no longer in recession with economic activity expanding 0.2% in the first quarter, leaving it 0.3% higher than a year earlier. Markets has been looking for slightly softer numbers at 0.1% and 0.2% respectively. NZD/USD is pushing higher.

Markets are alert to the risk of the RBNZ switching focus, dragging NZD/USD lower. But when it comes to directional risks for the New Zealand dollar beyond the short-term, it really comes back to the US interest rate outlook and health of the global economy.

The RBNZ is intent on defeating inflation even if it means sacrificing the economy, delivering a major surprise at its latest monetary policy meeting by flagging the likelihood that rates may need to increase again. The Zealand dollar surged on the unexpected hawkish pivot.

The RBNZ is highly likely to leave its overnight cash rate at 5.5% on Wednesday. However, with updated economic forecasts, along with a press conference from Governor Adrian Orr, the bank has been given plenty of clear air to shake these sleepy FX markets up, if it chooses to do so.

While that keeps the prospect of a near-term rate cut from the Reserve Bank of New Zealand on the table should inflationary pressures suddenly subside, for now, movements in NZD/USD continue to be dictated by sentiment on what the Federal Reserve may do with US interest rates in the months ahead.

Inflation remains key sticking point preventing interest rate cuts from the Reserve Bank of New Zealand, ensuring Wednesday’s first quarter consumer price inflation report will be closely watched by financial markets, especially should it print on the softer side of expectations.

The Kiwi dollar is pushing higher, potentially reflecting no escalation in dovish rhetoric from the RBNZ despite New Zealand sitting in a double-dip recession. It has an inflation mandate and inflation remains too high to justify lowering rates yet.

While it may be one of the smallest G10 FX central banks, what the Reserve Bank of New Zealand (RBNZ) lacks in size it more than makes up for in terms of market punch, often sparking major moves in the New Zealand dollar under the leadership of Governor Adrian ‘Shock and’ Orr. Wednesday's interest rate decision may be no exception.