FXStreet (Guatemala) – NZD/USD is dropping away to the downside and making fresh lows for the day, challenging the upside drift of yesterday as the RBNZ leaves rates unchanged at 2.5%.
The statement said that the uncertainty about the strength of the global economy has increased due to weaker growth in the developing world and concerns about China and other emerging markets. The RBNZ explained that Prices for a range of commodities, particularly oil, remain weak.
“Financial market volatility has increased, and global inflation remains low.” The statement also said, “However, growth is expected to increase in 2016 as a result of continued strong net immigration, tourism, a solid pipeline of construction activity, and the lift in business and consumer confidence.”
The main take away and what has been causing the bird to tank on the release was when the statement noted the weakness in the currency and how interest rates have declined, but said, “A further depreciation in the exchange rate is appropriate given the ongoing weakness in export prices.”
At the same time, while the RBNZ feels that annual core inflation remains consistent with the target range at 1.6%, “Some further policy easing may be required over the coming year to ensure that future average inflation settles near the middle of the target range. We will continue to watch closely the emerging flow of economic data.”
Fonterra cuts milk price forecast, says global conditions challenging
FOMC on hold – risk off markets
Meanwhile, stocks in the US are all down, with 9/10 sectors all in the red after the FOMC offered a dovish statement concerned about global growth, forcing the FOMC to leave rates unchanged and leaving an air of caution in the markets. Yen is picking up the bid at time of writing.
US GDP Q4 next main event
We will now await the next main catalyst in the US being the GDP Q4 on Friday and that event can be watch live at FXStreet here.
NZD/USD levels
Technically, NZD/USD has dropped below the pivot of 0.6482 and was capped yesterday and again today at the vicinity of descending 100 sma on the 4hr sticks at 0.6510 albeit with some overflow today with a high of 0.6532 today. The price is now on target for S2 at 0.6392 and S3 at 0.6361 ahead of 2016 lows of 0.6347.
(Market News Provided by FXstreet)