NZDUSD Returns Below the Downtrend Line, As RBNZ Cut 50bp
NZDUSD is trading 1.93 percent lower at 0.6398 after Reserve Bank of New Zealand cut aggressively the OCR by 50bp to 1.00%, while the market forecasting a 25bp cut. The Monetary Policy Committee expects growth to remain soft in the near term – although at 2.5% y/y in Q1, it is the envy of most other DM economies. Domestic demand is under pressure from a slowing housing market and subdued business confidence. The central bank has revised its GDP forecasts lower accordingly by -0.3 to -0.5 through the second quarter of next year. Unemployment Rate in New Zealand for the second quarter dropped to 3.9% from 4.2% beating the market expectation of 4.3%.
On technical side the pair is bearish and after a short break returned back below the downtrend trendline. Today the pair visited an area that we haven’t seen since January 2016 hitting the daily low at 0.6377. Now the pair’s immediate support stands at 0.6346 the low from January 2016. On the upside immediate resistance stands at 0.6521the 50 hour moving average while more offers will emerge at 0.6557 the daily high. All in all NZDUSD is bearish and traders have to wait until the dust from the unexpected interest rate cut settles down.