nzdusd the next potential domino to fall in the short term as rbnz looms 1851542017
On this coming Thursday, 11 May, RBNZ will meet and decide its latest monetary policy. Market consensus is calling for a status quo in monetary […]
On this coming Thursday, 11 May, RBNZ will meet and decide its latest monetary policy. Market consensus is calling for a status quo in monetary […]
On this coming Thursday, 11 May, RBNZ will meet and decide its latest monetary policy. Market consensus is calling for a status quo in monetary policy where its benchmark policy interest rate (official cash rate-OCR) is expected to remain at 1.75%, a record low.
The focus will be on the tonality of the monetary policy statement where in the last meeting held on 22 March 2017, RNBZ had reiterated that monetary policy will remain accommodative for a considerable period as numerous uncertainties remain on the international environment and policy may need to adjust accordingly. In addition, it projected that the OCR would remain at 1.75% until the second half of 2019.
There are a couple of new economic data to take note since the last monetary policy meeting as follow:
Even though inflation has reached RBNZ’s 2% mid-point target range, RBNZ is likely not to “jump the gun” and maintain its current stance on monetary policy guidance as recent increase in headline inflation may be temporary as oil price had started to decline where WTI crude had dipped below U.S$50 per barrel. Also, a continuation of slowdown in the housing market may also curb consumer spending which will lead to a slower projected economic growth in the near future.
In addition, several external risks remain such as U.S. President Trump’s proposed large fiscal stimulus that may face stiff opposition in the U.S. Congress which can delay its implementation. Also, regional geopolitical risk due to rising tensions between U.S. and North Korea.
Now, let’s us take a look at the latest technical elements on NZD/USD
Pivot (key resistance): 0.6945
Supports: 0.6850, 0.6760 & 0.6690/50
Next resistance: 0.6990
As long as the 0.6945 short-term pivotal resistance is not surpassed, the NZD/USD is likely to see a push down to test the critical range support of 0.6850 and a break below it opens up scope for the start of a potential medium-term bearish impulsive downleg to target the next supports at 0.6760 and 0.6690/650 next in the first step.
On the hand, a break above 0.6945 may negate the preferred bearish tone to see a squeeze up to retest the short-term descending channel resistance at 0.6990.
Charts are from eSignal
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