RBNZ Holds, Kiwi gain.
By: Ahura Chalki
Market analyst – IFC Markets
Earlier today, the Reserve bank of New Zealand had its monthly monetary policy meeting. RBNZ holds the current policies and Official Cash Rate (OCR) to remain at 0.25%. Members also decided to stay LSAP program at NZ $ 100 billion while the Funding-For-Lending (FLP) program remains effective. Like other major central banks, RBNZ members also “agrees to maintain the current stimulating monetary arrangement to reach the 2% target of interest rate and employment is above its maximum sustainable pace.
As a result of the pandemic, even though it was much less in New Zealand than in other countries, its economic activity slowed during the summer months following earlier increases in domestic spending and mixed short-term data.
Apart from a slightly changed statement tone “offsetting” some support from higher export prices, there were no significant surprises. The central bank noted that the global economic outlook continues to improve. However, economic uncertainty remains high, and divergences in economic growth both within and between countries are still significant.
NZDUSD jumped above R2 (0.7095) and currently trading at 0.7110, a bit lower than its R3 (0.7130). Pivot point at 0.7040 is the critical level for paring, and trading above this level can hold the current uptrend. On the other hand, we should not forget that weaker USD also helped the trend so much, so returning in USD will probably slow the Kiwi gaining. As we can see in the daily chart, the current level is essential, and a key level, which breathing above that, can open the doors for February high above 0.7400. On the flip side, returns under PP (0.7040) can change the trend for deeper levels, depend on USD Index movement as well.
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