NZD/USD: RBNZ may hike soon

NZD/USD jumped yesterday as inflation accelerated from 1.4% in Q3 to 1.6% in Q4.

The rise in inflation has strengthened the case for the Reserve Bank of New Zealand to raise interest rates. According to Bloomberg, traders saw a 63% chance that the RBNZ will hike the official cash rate by a quarter percentage point to 2.75% on Jan. 30. It’s also important to watch Manufacturing PMI index and consumer confidence report as they will also take part in forming the market’s expectations.

Yesterday NZD/USD retraced more than half on the Friday’s decline and closed above the daily Ichimoku Cloud top at $0.8313. Still the Indicator lines are horizontal, so we may expect consolidation. SEB Bank says that if the pair returns above $0.8362, the picture will be a lot less bearish and indicate a completed correction and instead turn focus to and above the recent $0.8433 high.

Support: $0.8295, $0.8273, $0.8250

Resistance: $0.8365, $0.8400, $0.8430

Chart. Daily NZD/USD

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