Rose on PM Key's remarks
The NZDUSD shot higher in trading today on the back of PM Key's comments that the currency's slump was faster than expected. This led to a sharp rise in the currency up to the 100 hour MA and the 38.2% of the move down from the most recent high (and high for the month of July) at the 0.65988 level.
The pair has since moved back lower and tests the midpoint of the move up today at the 0.6546. There is some buying interest on the test of the midpoint area (see chart above).
What should be a headwind for the NZDUSD is central bank pollicy this week. The RBNZ is expected to cut rates by 25 basis points this week with potential for more cuts down the road (or even a 50 BP cut this week). The RBNZ raised the rate from 2.5% to 3.5% in 2014 to head off runaway home prices. With the fall in commodity prices, it is thought the window is open for more easing once again.. This should keep the NZDUSD under pressure with sellers on rallies. The rate decision will be announced on July 22 at 5 PM ET or July 23 at 9 AM local time in New Zealand.
