NZDUSD is one of the biggest movers today

The NZDUSD is one of the biggest moves today with a gain of 1.19% on the day.

The move to the upside has seen the pair break above a swing area highs from last Thursday and Friday near 0.6412. That break led to a another move above a higher swing area near 0.64522.

The high price for the day reached 0.6491 before rotating back to the downside in the New York session.

As I type, the pair is trading at its lowest level in the New York session and retests the 0.64522 level. Traders will be eyeing that level for support. Stay above and the buyers remain in control. Conversely move below, and a rotation back toward the 0.6412 level cannot be totally ruled out (as long as the price stays below 0.64522).

Hold support and break above the high, and traders will be looking toward the 38.2% of the move down from the April 5 high at 0.65289

Fundamentally, the RBNZ will be meeting this week and expected to raise rates by 50 basis points to 2.0% (announcement will be at 10 PM ET on Tuesday).

Westpac expects a 50 basis point rise saying:

  • We expect the Reserve Bank to raise the Official Cash Rate by another 50 basis points to 2.00% at the May Monetary Policy Statement.
  • We also expect the RBNZ to provide a clear signal that there is more tightening to come. The RBNZ has come to the conclusion that stronger action early on will reduce the need for an even more painful peak in interest rates in the future. That prompted them to raise the cash rate by 50bps in April, opening the door for further large increases at future meetings.
  • We think that recent developments will leave the peak in the RBNZ’s OCR forecasts close to the 3.4% peak that was projected in February. However, with a faster pace of tightening, that peak will be reached sooner.

The RBNZ has increased rates 4 separate times since liftoff on October 6, 2021. The first three were 25 basis points. The last hike on April 13 was 50 basis points.

RBNZ rate hikes since lift-off

The price of the NZDUSD on each date:

  • October 6, 0.6912
  • November 24, 0.6876
  • February 23, 0.6717
  • April 13, 0.6797

Although the price is well off the low reached on May 12 at 0.6217, the current price of 0.6452 is at the lowest level going into the last 4 meetings.