The New Zealand Dollar weakened after the RBNZ set a 2.0 percent official cash rate, but added optimism for further easing than previously expected.
As RBNZ’s lack of action weighs with expectations, the central bank’s statement relative to updated language suggests that measures taken to ease the housing market are having the intended influence for a rate cut.
Given the added expectations of RBNZ’s further policy easing, the NZD/USD decline could suggest that the market would digest the successful cooling of the housing market that could speed up the next rate cut.
Further, speculations were mounting about the potential rate cut by the RBNZ in the near after the bank issued inflation expectations in November, citing front end bond yields declined along with the currency as RBNZ statements crossed the lines.
New Zealand Dollar on Hold Rates
The kiwi remained steady against its U.S. counterpart during the course of Thursday’s session after the Reserve Bank of New Zealand left interest rates unchanged, while the Aussie edged higher as the Federal Reserve’s policy decision sent the dollar down.
Meanwhile, NZD/USD slightly changed and settled at 0.7340 at the close of trade.
As the Reserve Bank of New Zealand decided to left rates on hold, it is cited that further rate cuts are needed in order to boost inflation.
"Our current projections and assumptions indicate that further policy easing will be required to ensure that future inflation settles near the middle of the target range," RBNZ Governor Graeme Wheeler said.
Current Stance of NZD/USD
The chart below illustrates the currency pair’s movement amid heightened anticipation of the RBNZ’s rate decision. Meanwhile, market players were signaled for Buy position on the third candle, which in fact did slightly soared and continued higher on a heavy trading volume before reaching its peak level of 0.74830 at resistance 0.74800 on September 7.
In addition, candlesticks were seen declining on a weighty trading volume after the kiwi struggled with higher milk prices, but did not hurt the currency too much amid the next session.
Thus, currency pair continued a downtrend after the USD significantly rallied due to a soaring US dollar index data.
As the Reserve Bank of England has led a mounting speculation on interest rate decision, we conclude that the pair still await for a supporting candle as the movement shown above are currently consolidating.
However, if the candle nearest to resistance 0.73548 breaks out, we still need to wait for two more candles on the green to confirm a trend. As of now, market players must wait on the sideline until any further movement show.
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