FXStreet (Guatemala) – NZD/USD is scraping the barrel in respect of a recovery attempt with strong risk aversion still at play in the second week of the New Year. China continues to weigh on the global recovery and the antipodeans are getting the brunt of that.
The issue for the bird is one of interest rates. The RBNZ’s inflation target of 2% will likely remain under pressure and force the hand of the Central Bank to act and cut interest rates. Last year there were eight reviews and four rate cuts of 25bps to 2.50%. Some observers do not feel the RBNZ will act until later in the year in June and again in September to net 2.0% OCR.
When will the RBNZ cut again?
This year there are seven meetings scheduled between January and November. March 10th and April 28th could also be in the firing line for a possible rate cut given the pace of the global downturn and it has not been unknown for a Central Bank to cut without warning, as we got with the BoC last year. Inflation data and economic data will be telling in the next coming weeks. A continued rout in commodity markets will certainly also play a part in the RBNZs thinking and so too will China, being the nation’s biggest trading partner and buyer of NZ’s dairy when it took over from Australia in 2013.
NZD/USD levels
Technically, the recovery from Nov business and 0.6428 lows is under attack in full effect, already with over 2/3rds of the move compromised in heavy selling from above 0.6870 to current lows of 0.6510. 0.6577 is a potential resistance at the 100 SMA on the daily chart.
(Market News Provided by FXstreet)