New Zealand dollar is the worst performing major currency today and RBNZ can be named to blame. While the New Zealand's central bank left interest rates unchanged, in-line with market expectations, it has also issued a dovish statement alongside decision. RBNZ said that it expects headline inflation to return to 1-3% target range in the second half of this year. This line has greatly boosted market hopes for a quick launch of the easing cycle in New Zealand.
Money markets now price in 14 basis points of easing for August meeting as well as 33 basis points of easing for October meeting. This means that markets see an over-50% chance of the first rate cut being delivered as soon as next month. Let us recall that markets saw a 26% chance of August cut before today's meeting. A total of 60 basis points of easing is currently priced in by year's end, suggesting 2 or 3 cuts from RBNZ. Note that there are only 3 RBNZ meetings left in 2024 (August, October and November) so seem to be sure that regardless of whether first cut comes in August or October, it will be followed by subsequent cuts on the next meetings.
Start investing today or test a free demo
Open account Try demo Download mobile app Download mobile appTaking a look at NZDUSD chart at H4 interval, we can see that the pair took a sharp turn lower following today's RBNZ policy decision. Pair pulled back fro the 0.6130 resistance zone, marked with 200-period moving average, and slumped below the 50-period moving average and 0.6100 support level. NZDUSD is currently approaching a local low from July 3, 2024 in the 0.6870 area, a break below would pave the way for a move towards the 0.6050 support. Pair may experience some more volatility again this afternoon when Fed Chair Powell appears before US House committee for the second day of his semi-annual testimonies (3:00 pm BST). However, a text of the testimony will remain the same as yesterday, surprises may only come from his answers to lawmakers' questions.
Source: xStation5
This content has been created by XTB S.A. This service is provided by XTB S.A., with its registered office in Warsaw, at Prosta 67, 00-838 Warsaw, Poland, entered in the register of entrepreneurs of the National Court Register (Krajowy Rejestr Sądowy) conducted by District Court for the Capital City of Warsaw, XII Commercial Division of the National Court Register under KRS number 0000217580, REGON number 015803782 and Tax Identification Number (NIP) 527-24-43-955, with the fully paid up share capital in the amount of PLN 5.869.181,75. XTB S.A. conducts brokerage activities on the basis of the license granted by Polish Securities and Exchange Commission on 8th November 2005 No. DDM-M-4021-57-1/2005 and is supervised by Polish Supervision Authority.
