- NZD/USD plummets below 0.6100 as the RBNZ reduced its OCR by 50 bps to 4.75%.
- The RBNZ was expected to make a significant rate cut amid weak growth prospects.
- Investors await the FOMC minutes for fresh clues on the outlook for interest rates.
The NZD/USD pair faces an intense sell-off and falls below the 0.6100 round level support in the North American session on Wednesday. The New Zealand pair plummets as the Reserve Bank of New Zealand (RBNZ) has cut its Official Cash Rate (OCR) by 50 basis points (bps) to 4.75%.
The RBNZ was expected to make a larger-than-usual rate cut due to softening labor market conditions and subdued growth. Market participants expect the RBNZ to cut interest rates at a similar pace again in November.
Meanwhile, discouraging market sentiment due to risks in the Middle East has also diminished the attractiveness of risk-sensitive assets. The US Dollar Index (DXY), which tracks the value of the Dollar against six major currencies, rises near 102.70.
The US dollar strengthens as traders have ruled out the scenario of the Federal Reserve (Fed) reducing interest rates again by 50 bps in November. The Fed began the policy easing cycle with a sizeable 50 bp cut in September. Meanwhile, investors await the Federal Open Market Committee (FOMC) minutes for the September meeting, which will be published at 18:00 GMT.
NZD/USD weakens after breaking below horizontal support drawn from the September 11 low of 0.6100 on a daily time frame. The overall trend of the New Zealand pair has turned bearish as it has formed a lower swing low. The asset is also trading below the 50-day Exponential Moving Average (EMA), which is trading around 0.6173.
The 14-day Relative Strength Index (RSI) falls below 40.00, suggesting bearish momentum has been triggered.
Further declines towards the psychological support of 0.6000 and the August 15 low of 0.5974 are very likely.
On the other hand, a reversal move above the October 8 high of 0.6146 will push the asset towards the 50-day EMA at 0.6173 and the October 4 high near 0.6220.
NZD/USD daily chart
economic indicator
Interest rate decision
RBNZ Interest Rate Decision Announced by the Reserve Bank of New Zealand.This rate affects a range of interest rates set by commercial banks, building societies and other institutions towards their own savers and borrowers. It also tends to affect the price of financial assets, such as bonds, stocks and exchange rates, which affect consumer and business demand in a variety of ways.
Last post:
Wed Oct 09, 2024 01:00
Frequency:
Irregular
Current:
4.75%
Dear:
4.75%
Previous:
5.25%
Fountain:
Reserve Bank of New Zealand
The Reserve Bank of New Zealand (RBNZ) holds monetary policy meetings seven times a year, announcing its decision on interest rates and the economic assessments that influenced its decision. The central bank offers clues about the economic outlook and future policy path, which are highly relevant to the valuation of the NZD. Positive economic developments and optimistic outlook could lead the RBNZ to tighten policy by raising interest rates, which tend to be bullish for the NZD. Policy announcements are usually followed by Governor Adrian Orr’s press conference.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
