NZD to bounce higher if OCR remains unchanged
NZD to bounce higher if OCR remains unchanged
Moments before April’s OCR announcement, NZDUSD was trading at 0.7678. Less than one month later the NZ Dollar was down nearly 8.5% (just shy of 0.70) following the strong Nonfarm payroll data. TWI has only depreciated by 2.14% but is up 0.38% since the March OCR decision.
Whilst RBNZ mull over the performance of NZ TWI we also have Q1 GDP to look forward to next week, which is I strongly suspect RBNZ will keep rates on hold along with the conditional easing bias.
A rate hold could support the NZ Dollar as pre-emptive hawks close their short positions and yield investors return to the table. The statement is likely to remain dovish with clear guidance on the criteria for a rate cut but I expect few changes to the statement itself.
The Daily chart remains in a solid downtrend although a break above the 0.720 high could warn of a change in near-term trend. The Greenback is also on the back foot which is providing additional support to NZDUSD, with next resistance around 0.726
In the event RBNZ do cut the OCR then a break below 0.70 can be expected, with 0.696 and 0.69 likely areas of support. It would then be back to the US to have the final say for the week with Retail sales and PPI data. US Retail is of particular interest after the dire sales seen in April, as strong number will see the FED Hawkes driving the Greenback higher and NZD lower, to the delight of RBNZ.
ends