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NZD/USD rises 30+ pips as RBNZ keeps benchmark interest rate unchanged

  • NZD/USD extends the recovery gains from Tuesday following RBNZ’s rate decision.
  • Coronavirus updates seem to be risk-positive off-late.
  • RBNZ Governor’s speech, Fed Chair’s Testimony and Chinese headlines could offer near-term direction.

NZD/SD takes the bids to the intra-day high of 0.6450 after RBNZ matched expectations of no rate change on early Wednesday.

In its first monetary policy meeting of 2020, the Reserve Bank of New Zealand (RBNZ) matched wide marked expectations of announcing no change to its benchmark interest rate, currently at 1.0%. Even so, the New Zealand central bank’s quarterly economic forecasts are interesting to read. Following the event, NZD/USD spiked up to the intra-day high.

Read: Breaking: A 'hawkish' RBNZ leaves OCR on hold at 1.0% (NZD jumps to 0.6442 resistance)

The pair earlier benefited from the receding risks of coronavirus. The diminishing rate of new infections from the epicenter Hubei, coupled with Chinese liquidity infusion, could be considered as the main catalyst behind the latest risk reset.

Also contributing to the risk recovery should be the US Federal Reserve Chairman Jerome Powell’s testimony on Tuesday that kept his upbeat bias for the current monetary policy while praising the economic developments. It’s worth mentioning that the Fed Chair cited fears of coronavirus.

That said, the US 10-year treasury yields remain on the front foot above 1.60% as Japanese traders return to desks after Tuesday’s holidays. Also portraying mildly upbeat trade sentiment is S&P 500 Futures that make rounds to 3,360 by the press time.

Markets will now gear up for the RBNZ Governor Adrian Orr for further details relating to the quarterly forecasts and the central bank’s current rate bias. It’s worth mentioning that the hints as to how the Chinese coronavirus could impact RBNZ decisions in the future will be particularly important to watch.

Following that, the US Fed Chair will again testify, in front of the Senate Banking Committee on Wednesday. While the Fed leader is less likely to offer any changes from his latest speech, details of his cautious optimism will be closely observed.

Technical Analysis

The latest pullback from 0.6380 needs to clear a 13-day-old falling trend line, at 0.6430 now, to aim for 100-day SMA near 0.6478. Alternatively, the bearish MACD signals confront oversold RSI to highlight 0.6380/75 as near-term key support holding the gate for the pair’s declines to November 2019 low near 0.6315.

 

Breaking: A 'hawkish' RBNZ leaves OCR on hold at 1.0% (NZD jumps to 0.6442 resistance)

Editors note: This is a developing story – more to come... In its first policy meeting since 13 November, the Reserve Bank of New Zealand, (RBNZ), whi
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