Kiwi Trades Noticeably Higher Ahead of RBNZ’s OCR Decision Due Tomorrow, 50+ PIP Volatility Likely in NZD Parity; April 12, 2022

New Zealand Interest Rate Decision

New Zealand has scheduled to release Interest Rate Decision on April 13 at 0200 GMT/0730 IST. Short term interest rates are the paramount factor in currency valuation – traders look at most other indicators merely to predict how rates will change in the future. Most importantly, it discusses the economic outlook and offers clues on the outcome of future decisions.

As per the past data we can see that New Zealand’s Central Bank will raise interest rates for a fourth straight meeting to control the rising inflation in more than 30 years. The Reserve Bank will lift the official cash rate by a quarter percentage point to 1.25% Wednesday in Wellington, according to 15 of 20 economists surveyed by Bloomberg. According to the latest economic results of NZ, rising borrowing costs, the rapid spread of New Zealand’s omicron outbreak and global uncertainty are hurting business and consumer confidence, while house prices are also falling.

According to the BNN Bloomberg Survey, NZ Consumer confidence has slumped to its weakest since 2004, while business sentiment is the lowest since the Covid-19 pandemic hit in early 2020. House prices fell 2.3% in the three months through February, according to Real Estate Institute data. At the same time, inflation is running at 5.9%, the fastest since 1990, and unemployment has fallen to 3.2%, a record low. The RBNZ’s most recent projections show the OCR rising to about 3.25% by the end of 2023, and inflation falling back into its 1-3% target range next year. Let’s wait for tomorrow’s RBNZ meet and NZD’s reaction towards it.

Let’s see how NZD has reacted during the previous data release:

Feb 23:

Nov 24:

Technical View:

NZD/USD:

• The kiwi rose sharply during U.S. session as U.S. fails to meet inflation expectations and remains well supported above $0.6850 mark.
• The pair made intraday high at $0.6879 and low at $0.6805 mark.
• A day chart and H1 chart with triple EMA confirm Bullish trend for the time being.
• A sustained close above $0.6890 requires for the upside rally.
• Alternatively, a consistent close below $0.6810 will check further supports.

 
Take a look and do trade wisely!
Good Luck