Is this the big turn in the New Zealand dollar? It certainly could be.
Technically, NZD/USD balked at the 2011 high and even before that it was showing signs of losing momentum.
NZD/USD daily
Today’s RBNZ decision added the missing fundamental piece to the puzzle. The story wasn’t so much the jawboning (although it was a bit more aggressive), it was the shift to a more neutral stance. Already, the OIS market has taken out the assumption for almost 2 rate hikes in the coming 12 months and lowered it to 1. On top of that, no move is likely until at least December.
The other side of the fundamental story is the US dollar, which could start to rally at any point if the Fed starts to hint at higher rates. Alternatively, a long-overdue correction in risk assets could press the NZD/USD downside.
Finally, the inability to get off the floor today and a likely close near the bottom is a negative signal.
