Central banks in Australia and New Zealand! 

Aussie and Kiwi in Forex market!

Market analyst – IFC Markets

Earlier today Reserve bank of Australia held its interest rate decision and monetary policy meeting. And tomorrow we have to start a day with the RBNZ meeting. 

As for today, according to what Governor Phillip Low presented in the Australian central bank’s statement, they believe that economic growth going fine and this Setback is temporary, however, its I unlikely that conditions are fine to start rate hikes any time before 2024, that’s why still central bank is committed to maintaining highly supportive monetary conditions.

On the labor market, data show that many firms are seeking to hire workers, and the expectation is to see the pre-pandemic level of employment not so late. And finally, as the statement says, it is important for Australia that lending standards stay and that loan serviceability buffers also stay appropriate.

After holding dovish policies by RBA, Aussie was weaker today against its crosses, and it is expected to hold this condition for now.

While today RBA was unchanged, tomorrow we are waiting to see the Reserve Bank of New Zealand raised the rates, like what they did for tapering and started the Hawkish policies. This policy is supposed to help the Kiwi against its crosses. 

In the previous meeting, while the Central bank was planning to start rate hikes, a sudden virus outbreak put them in the holding policy, and now it seems they have no more excuse to do it. Economic growth is fine and the vaccination process in New Zealand is great, while in the last months we can see inflation is raising. Somehow we can say, they have to raise the rates at least 0.50% by end of 2021. 

From the technical point of view, as it is clear in the below figure, Kiwi created a key pivot level at the current rate of 0.6965 dollars. Above this level, 0.7050 is the first resistance. As we expect, if RBNZ starts its rate-raising, above the first resistance, doors will open for the higher levels above 0.7100. In the H1, and H4 charts, RSI already moved above 50-level and with increasing OBV trend line along with increasing prices, confirming the trend changing in its daily chart as well.

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