NZD/USD Falls Over 1% Post RBNZ Cutting Rates

The NZD/USD fell by 1.28% and closed just below 0.6000 after the RBNZ issued a dovish outlook. Overnight, U.S. CPI rose 0.155% in July and core CPI added 0.165%, in line with Wall Street expectations and keeping the Fed on track for lowering interest rates next month.

• The NZD/USD fell to 0.6003 during the Asian session on the back of the RBNZ cutting with a dovish outlook, the pair recovered to 0.6031 post US CPI before ultimately closing the session at lows of 0.5998
• The RSI is neutral, but the MACD shows decreasing bullish momentum. The Close below 0.6000 is bearish, although the pair has managed to hold above the 20-day EMA of 0.5998 so far, below here 0.5977 (Aug 8 lows) becomes the target. Resistance levels are 0.6027 (50-day EMA) & 0.6047 (100-Day EMA).
• RBNZ Gov Orr is speaking to parliament currently and stated that New Zealand's CPI is returning to the 1-3% target range, but the current economic environment remains weak. He emphasized the need for New Zealand to improve its potential growth rate, highlighting the role of fiscal policy in achieving this, he also indicated that future monetary policy discussions will focus on either holding or cutting rates.
• The RBNZ cut interest rates by 25bp and revealed that a 50bp cut was considered, citing a more significant economic slowdown and expectations-based inflation targeting.
• RBNZ dated OIS is fully pricing in another cut at the October meeting, and 77bps of cuts are priced into year-end.
• The NZ-US 2yr swap spread was 17bps lower on Wednesday, falling to 4bps
• Expiries: 0.6020 (NZD199.34m) for Aug 15 NY cut
• Today, we have food prices & card spending at 08:45 AEST