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NZD: NZD/USD Continues Slide, Down Another 1% Following A Dovish RBNZ

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  • NZDUSD closed Wednesday down 1.24% at 0.6061, after a dovish RBNZ cut 50bps. The statement from RBNZ noted the decision to cut by 50bps rather than 25bps was "consensus" across the Committee, forward guidance was somewhat more open-ended, noting the pace of future OCR changes "would depend on its evolving assessment of the economy" compared to the prior focus on inflation.
  • The Kiwi is now trading at 7 week lows and down about 5% since Oct 1, with further deep rate cuts expected and growing tension in the middle east weighing on the currency
  • Technically, NZD/USD is now trading below all key moving averages, the 14-day RSI is 45, while the MACD is printing the largest negative bars for the year, signally bearish momentum. The pair is trading right on the 61.8% retracement from the July 30-Oct 1 move, at 0.6060 a break here would open a move to test key support at 0.6000. While typically when the pair has been this oversold we have seen reversals, with any upside move likely to meet resistance at 0.6112 (200-day EMA)
  • RBNZ dated OIS pricing has continued to firm with 55.5bps of cuts priced for November. Pricing has also firmed further out to August, with a further 167bps priced.
  • Expiries: 0.595 ($300m), 0.600 ($200m) Oct 10 NY cut
  • The NZ-US 2yr swap has plunged to its lowest level since March 2020 on Wednesday of -27bps.
  • Today, we have NZ Government 12-Month Financial Statements and 2028, 2034 & 2041 bond auctions
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  • NZDUSD closed Wednesday down 1.24% at 0.6061, after a dovish RBNZ cut 50bps. The statement from RBNZ noted the decision to cut by 50bps rather than 25bps was "consensus" across the Committee, forward guidance was somewhat more open-ended, noting the pace of future OCR changes "would depend on its evolving assessment of the economy" compared to the prior focus on inflation.
  • The Kiwi is now trading at 7 week lows and down about 5% since Oct 1, with further deep rate cuts expected and growing tension in the middle east weighing on the currency
  • Technically, NZD/USD is now trading below all key moving averages, the 14-day RSI is 45, while the MACD is printing the largest negative bars for the year, signally bearish momentum. The pair is trading right on the 61.8% retracement from the July 30-Oct 1 move, at 0.6060 a break here would open a move to test key support at 0.6000. While typically when the pair has been this oversold we have seen reversals, with any upside move likely to meet resistance at 0.6112 (200-day EMA)
  • RBNZ dated OIS pricing has continued to firm with 55.5bps of cuts priced for November. Pricing has also firmed further out to August, with a further 167bps priced.
  • Expiries: 0.595 ($300m), 0.600 ($200m) Oct 10 NY cut
  • The NZ-US 2yr swap has plunged to its lowest level since March 2020 on Wednesday of -27bps.
  • Today, we have NZ Government 12-Month Financial Statements and 2028, 2034 & 2041 bond auctions