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Feb 23 - 08:55 PM

NZD/USD - COMMENT-NZD/USD May Be Volatile Around RBNZ Decision

By John Noonan  —  Feb 23 - 06:51 PM

The Reserve Bank of New Zealand is not expected too make any changes to policy at Wednesday's meeting nL1N2KP01C, but there might be some volatility around the monetary policy statement and Governor Adrian Orr's press conference.

The RBNZ faces the difficult task of acknowledging that the New Zealand economy has performed far better than it forecast at the November meeting, while at the same time not encouraging the market to start pricing in a reduction of monetary accommodation.

The MPS and Governor Orr will likely emphasize lingering uncertainty and downside risks and an extremely accommodative policy for the foreseeable future.
But they will try and avoid being overly dovish at a time when the New Zealand property market is in danger of overheating.

The NZD/USD opened in Asia Wednesday at 34-month highs around 0.7340 and has been one of the best performing currencies in the latest bout of USD weakness.
Resistance is found at a series of tops at 0.7435/45.
The objective of the current trend higher is around 0.7550, where a high from July 2017 converges with the 61.8 Fibonacci retracement of the 0.8839-0.5469 drop between July 2014 and April 2020. Support is found at the 10-day moving average at 0.7260 and a break below would ease the upward pressure.

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Source:
Refinitiv IFR Research/Market Commentary

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