(1 Hour post event )
(End of Day post event)
08/10/2017 21:00:00 GMT
August 2017 Reserve Bank of New Zealand (RBNZ) Interest Rate Decision
The Reserve Bank of New Zealand (RBNZ) held the official cash rate at the record-low of 1.75%, with the central bank largely endorsing a wait-and-see approach at Governor Graeme Wheeler’s last meeting as ‘numerous uncertainties remain and policy may need to adjust accordingly.’ The fresh remarks suggest the RBNZ remains in no rush to raise the benchmark interest rate as ‘GDP in the March quarter was lower than expected, adding to the softening in growth observed at the end of 2016,’ and the central bank may preserve the current policy throughout 2017 as ‘headline inflation is likely to decline in coming quarters as the effects of higher fuel and food prices dissipate. NZD/USD initially nudged higher as the RBNZ stuck to the sidelines, but the market reaction was short-lived, with the pair slipping below the 0.7300 handle to end the day at 0.7277.
How To Trade This Event Risk(Video)
Bearish NZD Trade: Governor Spencer & Co. Endorse Record-Low Rate, Jawbone Local Currency
- Need a red five-minute candle following the rate decision to consider a short NZD/USD trade.
- If market reaction favors a bearish kiwi position, sell NZD/USD with two separate lots.
- Set stop at the near-by swing high/reasonable distance from entry; look for at least 1:1 risk-to-reward.
- Move stop to breakeven on remaining position once initial target is met, set reasonable limit.
Bullish NZD Trade: RBNZ Adopts Hawkish Outlook for Monetary Policy
- Need a green, five-minute candle to consider a long NZD/USD trade.
- Carry out the same setup as the bearish kiwi position, just in the opposite direction.
Key Levels For NZD/USD
NZD/USD Daily Chart
DailyFX 3Q Forecasts Are Now Available
- Near-term outlook for NZD/USD remains capped by the 0.7470 (50% expansion) hurdle, with the pair at risk for a larger pullback as it extends the series of lower highs & lows from the previous week.
- Close below the Fibonacci overlap around 0.7190 (50% retracement) to 0.7200 (38.2% retracement) may open up the 200-Day SMA (0.7146), which sits just above the monthly-low (0.7144), with the next region of interest coming in around 0.7100 (38.2% retracement) to 0.7110 (38.2% expansion).
- Keep in mind, NZD/USD has negated the risk for a head-and-shoulders reversal after pushing to a fresh monthly-high (0.7433), and the pair may largely consolidate going into the first full-week of October amid quarter/month-end flows.
- Interim Resistance: 0.7730 (100% expansion) to 0.7744 (April 2015-high)
- Interim Support: 0.7040 (50% retracement) to 0.7053 (April 2017-high)
NZD/USD Retail Sentiment
See how shifts in NZD/USD retail positioning are impacting trend- Click here to learn more about sentiment!
Retail trader data shows 48.1% of traders are net-long with the ratio of traders short to long at 1.08 to 1. The number of traders net-long is 16.2% higher than yesterday and 3.3% lower from last week, while the number of traders net-short is 7.6% lower than yesterday and 13.3% higher from last week.
— Written by David Song, Currency Analyst
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