NZD: New Zealand Dollar remains close to local lows

At the Forex currency market the New Zealand Dollar rate is still under the pressure due to the decision of the Reserve Bank of New Zealand to lower interest rate which was taken at the meeting on Thursday.

Forex forecast: MACD indicator is in the negative area for the pair NZD/USD and continues to descend, giving a pair sell signal. Stochastic oscillator goes down in the neutral zone and is giving a similar signal.

Forex recommendations: if bearish positions consolidate and in case of breakdown at the level of 0.7320, which is still a local bottom, traders’ targets will be the levels of 0.7250 and 0.7210.

So, at the last meeting the Reserve bank of New Zealand decided to lower interest rate by 50 basis points, to 2.50% par annum. Investors, who had predicted possible reduction of the indicator, ignored its decrease by 25 basis points.

Previous sales of the NZD were caused by the view of the country’s Prime Minister John Key, who said in his interview to Bloomberg News that he would have approved the decision of the Reserve Bank of New Zealand to reduce interest rate from the current 3%; next meeting of the RBNZ is scheduled for 10 March. Politician does not rule out that effect of the earthquake which took place in the South of New Zealand in February can contribute to the rollback of the national economy into the state of recession.

We would remind that at the last meeting in January the Reserve Bank of New Zealand made an expected decision to keep interest rate at the previous level of 3.0% per annum. The Central Bank showed adherence to maintain monetary policy unchanged. In the follow-up comments, the head of the RBNZ, Bollard stressed that the rates will sequentially increase over the next two years.

Apparently, the RBNZ will start a new phase of monetary policy tightening soon.

Statistics released in February was mixed: index of industrial activity rose to the level of 53.7 in January against 53.2 in the previous period; producer prices at exit/entrance for quarter IV: +0.9%/+0.2% respectively; consumer confidence index ANZ increased to 108.2 in February against 117.1 in January. 

 

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