Henry Liu
Former FPA Special Consultant
- Messages
- 473
RBNZ (Reserve Bank of New Zealand) will be releasing its interest rate decision today and it is widely expected that Gov. Bollard will decide to continue on the post-quake reconstruction timeline. No rate hikes is expected today...
5:00pm (NY Time) RBNZ Rate Decision Forecast 2.50% Previous 2.50%
ACTION: NZDUSD SELL 2.25% / BUY 2.75%
The Trade Plan
Current forecast from economists surveyed by Bloomberg agree that RBNZ is likely to leave the official rate at 2.5% during this meeting; however, in the unlikely event that Gov. Bollard surprises the market and hike rates to 2.75% or higher, we should see an immediate strong demand in the NZD which is a great opportunity to spike trade BUY NZD/USD.
However, if RBNZ cuts rate to 2.25% or lower, we should SELL NZD/USD and see it fall back towards former resistance around 0.8000.
For more information on my trading methods, please read:
Henry Liu's Trading Method
The Market
Recent rise in NZD versus other major currencies, especially against USD and JPY, has provided room for RBNZ to delay rate hike decisions. As a matter of fact, Bollard may talk down speculation as the region still copes with the earthquake in Christchurch earlier this year...
With higher trade balances and optimistic employment sector, market is right in speculating a rate hike in the near future, but just not this meeting.
Additional Thoughts
NZD is a very slow moving currency and for a news of this caliber, decent retracements are not likely. Considering the expectation for this release, if we do get an “as expected”, market will be focusing on the accompanied statement. Which im my opinion should be somewhat bearish...
Also 5:00pm market is usually low in liquidity. Unless we get a surprise, it’s probably best to stay out…
Pre-News Considerations
There is no pre-news trading for this release, but pending on the accompanied statement, we could see some weakness in the NZD.
Historical Chart and Data for NZ Interest Rate
Thanks,
5:00pm (NY Time) RBNZ Rate Decision Forecast 2.50% Previous 2.50%
ACTION: NZDUSD SELL 2.25% / BUY 2.75%
The Trade Plan
Current forecast from economists surveyed by Bloomberg agree that RBNZ is likely to leave the official rate at 2.5% during this meeting; however, in the unlikely event that Gov. Bollard surprises the market and hike rates to 2.75% or higher, we should see an immediate strong demand in the NZD which is a great opportunity to spike trade BUY NZD/USD.
However, if RBNZ cuts rate to 2.25% or lower, we should SELL NZD/USD and see it fall back towards former resistance around 0.8000.
For more information on my trading methods, please read:
Henry Liu's Trading Method
The Market
Recent rise in NZD versus other major currencies, especially against USD and JPY, has provided room for RBNZ to delay rate hike decisions. As a matter of fact, Bollard may talk down speculation as the region still copes with the earthquake in Christchurch earlier this year...
With higher trade balances and optimistic employment sector, market is right in speculating a rate hike in the near future, but just not this meeting.
Additional Thoughts
NZD is a very slow moving currency and for a news of this caliber, decent retracements are not likely. Considering the expectation for this release, if we do get an “as expected”, market will be focusing on the accompanied statement. Which im my opinion should be somewhat bearish...
Also 5:00pm market is usually low in liquidity. Unless we get a surprise, it’s probably best to stay out…
Pre-News Considerations
There is no pre-news trading for this release, but pending on the accompanied statement, we could see some weakness in the NZD.
Historical Chart and Data for NZ Interest Rate
Thanks,
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