On Guard For A Dovish Hold From RBNZ | NZD/USD, NZD/JPY


RBNZ hold their OCR meeting less than 24 hours away. Whilst we expect they’ll hold, we suspect they may introduce a dovish tone, given the apparent ‘race to the bottom’ seen among the Fed, ECB and RBA recently.

As we noted in previous reports, RBNZ signalled a cut in March before weak inflation data all but confirmed May’s cut. However, when the expected cut arrived their May statement suggested 1.5% would be the floor for now. Moreover, Governor Orr said in May that “outlook for interest rates remain balanced at the moment” and earlier this month Assistant Governor said RBNZ’s central view is for rates to remain broadly around current levels for the foreseeable future. Put together, we expect RBNZ to remain on hold tomorrow.

However, given the dovish FOMC meeting, comments from Draghi and a rate cut from RBA (along with repeatedly dovish comments from Governor Lower), it’s plausible RBNZ could reintroduce a dovish tone to their statement tomorrow.


Going into the meeting, NZD/USD remains supported whilst the US dollar continues to unwind. It appears to be carving out a double bottom pattern above 0.6500 which would be confirmed with a direct break above 0.6685. However, as its now within its 7th bullish session and RSI(2) is heavily overbought below key resistance, we could see NZD/USD dip lower and respect resistance. A dovish tone on tomorrow’s statement could be just the catalyst (and not to mention the US dollar index is losing momentum above the March lows) whereas an unsuccessful G20 meeting (no deal with China) would likely scupper it potential for a bullish breakout.


NZD/JPY could be setting itself up for a swing trade short. The cross remains in a clear downtrend and has retraced towards the 38.2% - 50% retracement levels. As RSI(2) is overbought, so we’d consider fading spikes around current levels with a view for a break beneath the 70.27 low. However, with the G20 just around the corner, fears of a no-deal between US and China could bring selling pressure onto yen crosses (particularly commodity FX) and could prove to be the bigger driver over tomorrow’s RBNZ meeting. Although a dovish meeting would only add to its headwinds.


Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.