NZD/USD advances towards 0.6400 after RBNZ rate hike of 50 basis points

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  • NZD/USD rebounds to two-day highs after RBNZ rate hike.
  • The entity agrees with market forecasts of a rate hike of 50 basis points, and indicates the convenience of further tightening.
  • Declines in US Treasury yields resume, lightly bid stock futures put antipodal downward pressure.
  • The Chinese premier’s comments and a softer New Zealand PPI provoked kiwi sellers.

The NZD/USD has staged a 50 pip rally following the announcement by the Reserve Bank of New Zealand that it has raised interest rates by 50 basis points to 3.0%. The pair has reached a two-day high at 0.6383trading at time of writing above 0.6364, gaining 0.27% daily.

Although the RBNZ met market expectations, the optimism from the quarterly Monetary Policy Statement seems to have favored the NZD/USD bulls.

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However, fears surrounding China, Europe, as well as a cautious mood ahead of key data/events, challenge buyers of the Kiwi pair of late.

Chinese Premier Li Keqiang made remarks reported by the Communist Party’s flagship newspaper, People’s Daily, urging local officials in six key provinces that account for around 40% of the country’s economy to step up pro- increase. On Wednesday, President Xi Jinping and the state planner from the National Development and Reform Commission (NDRC) signaled they were ready to take more measures to combat recession fears.

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Given the dragon nation’s trade ties to the Pacific, as well as being the world’s largest commodity consumer, any downside for Beijing weighs on NZD/USD.

As sentiment fades, 10-year US Treasury yields fade previous day’s bounce, and SP500 Futures retreat from a four-month high.

Having witnessed the initial reaction to the RBNZ’s moves, NZD/USD traders will be looking to Governor Adrian Orr’s comments for further momentum. Later in the day, July US Retail Sales will be released, expected to be 0.1% vs. 1.0% prior, as well as Federal Open Market Committee (FOMC) meeting minutes, to get clear directions. Headlines about China and the recession will also be important.

NZD/USD Technical Analysis

Barring a daily close below the monthly support line around 0.6260 at press time, NZD/USD buyers remain hopeful. However, a downtrend line resistance near 0.6460 at the latest defies the upside momentum.

NZD/USD

Panorama
Last Price Today 0.6378
Today’s Daily Change 0.0031
Today’s Daily Change % 0.49
Today’s Daily Opening 0.6347
Trends
20 Daily SMA 0.63
50 Daily SMA 0.6267
100 Daily SMA 0.643
200 Daily SMA 0.6615
levels
Previous Daily High 0.6393
Previous Daily Minimum 0.6317
Previous Maximum Weekly 0.647
Previous Weekly Minimum 0.6228
Monthly Prior Maximum 0.633
Previous Monthly Minimum 0.6061
Daily Fibonacci 38.2% 0.6346
Daily Fibonacci 61.8% 0.6364
Daily Pivot Point S1 0.6312
Daily Pivot Point S2 0.6276
Daily Pivot Point S3 0.6235
Daily Pivot Point R1 0.6388
Daily Pivot Point R2 0.6428
Daily Pivot Point R3 0.6464

Source: Fx Street

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