Forex Investment and Currency Trading

Tonight is the Reserve Bank of New Zealand’s Official Cash Rate (OCR) decision. It being an OCR Review there will only be a statement issued to explain the rate decision but no update of the forecasts.
Market expectation is for a 50 basis point cut with a dovish statement. Central banks around the world are announcing their predilection towards holding rates lower for longer. Canada, the Riksbank and ECB officials have all made statements to this effect and we will look to see if the RBNZ follow this trend. Announcing a reluctance to raise rates in the future is a verbal [...]

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The Reserve Bank of New Zealand ease monetary policy by 50 basis points this afternoon, and as a result the NZD has rallied about 1%. Some in the market were looking for a 100 basis point cut. The following story covers this announcement well. This should be seen as an opportunity to sell NZD in the medium term.
By Tracy Withers
March 12 (Bloomberg) — New Zealand’s central bank cut its benchmark interest rate by half a percentage point to a record-low 3 percent to help steer the economy out of it worst recession in more than 30 years. “The combined effects [...]

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A number of short term drivers that have increased the NZD bearishness. Last week’s GDP data confirmed that the economy shrank in Q1. And this was not a one off. There was widespread weakness across the primary and manufacturing sectors and parts of the services sector, as the initial effects of the drought, the housing market correction, and a major squeeze on household budgets start showing up in the national accounts data. The already high chance of economic recession just took a step higher. Indicators suggest that Q2 will be worse than Q1. That should be good enough reason for [...]

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USD drifted steadily lower though the Asian session, before spiking higher as London
opened. The net effect has been to leave most majors little changed from yesterday’s North American close. Stocks are essentially flat on European cash markets and likewise on the US index futures. Commodity currencies are generally stronger, most notably NZD which is also benefiting from strong domestic data and ongoing short covering. North America data is light today, with just new home sales due in the US (consensus 523K – a new cycle low) and nothing in Canada.
EUR/USD pushed higher through Asia to test resistance around 1.5820, but [...]

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