NZD/USD ahead of RBNZ meeting
NZD/USD managed to close above the 100-day MA on Friday (0.7565), but faces resistance in the 0.7635 area on Monday.
This week is important for kiwi, because the Reserve Bank of New Zealand conducts meeting on Wednesday at 21:00 GMT. Last week RBNZ assistant Governor McDermott sounded dovish as he said that the central bank isn’t considering an increase in interest rates at present and is watching for any signs of weakening demand and domestic inflationary pressures that could warrant a rate cut. Such statement was a surprise for the market players, because the RBNZ was on a rate increase cycle as it raised the benchmark rate from 2.5% early in 2014 to 3.5% by July.
The consensus forecast is that the RBNZ will stay on hold this week. Analysts at BNP Paribas think that the markets have overreacted to McDermott’s comments. In their view, New Zealand’s economy is in good shape, and the regulator will just emphasize that rates will stay on hold for a considerable period of time. As interest rates in New Zealand are highest among the advanced economies, the negative impact on NZD will likely be limited. On the other hand, weaker US dollar will push NZD/USD higher.
Further support is at 0.7530 and 0.7465. Resistance is at 0.7700 and 0.7740.