New Zealand

NZD/USD's break above 60c ahead of the RBNZ's announced that they held rates at 5.5% again was shortly lived, and momentum has turned decisively lower. Ans there could be further downside to come.

The RBNZ held their cash rate steady for the first time following 12 consecutive hikes, whilst AUD/USD broke above its 200-day MA ahead of a key US inflation report.

NZD pairs were lower after the RBNZ hiked for a 12th consecutive meeting and signalled they may have reached a peak rate of 5.5%. At least for now.

The RBNZ (Reserve Bank of New Zealand) are expected to hike by another 25bp tomorrow, despite 1 and 2-year inflation expectations plummeting at their fastest pace since the pandemic.

New Zealander’s can breathe a sigh of relief that their rate of inflation is finally slowing, with both annual and quarterly CPI coming in much less than expected.

Not for the first time, the RBNZ surpassed market expectations with a 50bp hike, raising their cash rate for an 11th consecutive meeting to 5.25%.

Today’s 50bp hike suggests there are more hikes to come, but we note that they removed the 100bp increment from their debate and slowed their pace of tightening.

Whilst economists and market pricing favour a 50bp RBNZ hike on Wednesday, the potential for a 75bp hike is real.

If you like the Pound, you may wish to trade it vs the NZD

Although NZD/USD is moving lower, it may be ready for a short-term bounce.

Sometimes, when things look to be at the worst, they may turn out to be the best.

The RBNZ needs to consider if they have the economic capacity to keep rates unchanged and buy time.

Price broke through the most recent highs, forming a double bottom price formation.

We are over a month into the new year, and the employment data released later will be for Q4 2019.

Shooting Star candlestick formations are indicative of a reversal