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Forex Signal (Wed September 15 2010, 4:00pm NY Time EDT) - NZ RBNZ Rate Decision

Discussion in 'Current Forex Trading Signals' started by Henry Liu, Oct 26, 2010.

  1. Henry Liu

    Henry Liu Former FPA Special Consultant

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    RBNZ (Reserve Bank of New Zealand) will be releasing its interest rate decision today and it is widely expected that Gov. Bollard will keep rates unchanged today at 3.00%; here is the forecast:

    4:00pm (NY Time) RBNZ Rate Decision Forecast 3.00% Previous 3.00%
    ACTION: NZD/USD BUY 3.25%


    The Trade Plan
    With current forecast from all 15 economists surveyed by Bloomberg agreeing that RBNZ is likely to keep rates unchanged during this meeting, possibilities of getting in on a trade after the release is not very likely; however, in the event that Gov. Bollard surprises the market by:

    1. Hike rates to 3.25%: We should see a strong demand in the NZD immediately, and a spike trade to BUY NZD/USD is recommended using spike trading method.

    2. RBNZ Bollard talks about imminent future rate hikes in his accompanied speech; this should add strong demand for NZD. A spike trade to BUY NZDUSD should be justified.

    For more information on my trading method:
    Henry's Spike Trading Method

    The Market
    NZD has been on a rally mostly due to Fed's upcoming QE measure and risk appetite sentiment. As it is widely expected for this rate decision to be unchanged due to the recent moderation in inflation and consumer spending, plus the economic effects of earthquake on September 4, most analysts agree that RBNZ should not hike interest rate until 2011.

    Therefore, it is possible that we may see some sell-off (short-term) in the NZD especially against AUD as in the coming months... However, if Governor Bollard remains optimisitc and plans to resume rate hike as soon as rebuilding takes place (earthquake), we could see some recovery in the NZD towards the end of the year...

    With upcoming 3rd Quarter GDP forecast at flat to slightly negative and retail spending disappointing for the second month in a row, Governor Bollard of RBNZ stated that he "wouldn't seem an unreasonable expectation" for no rate hikes until 2011.

    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, and if Bollard cautions the market about a possible pause, expect to see huge drop in NZD. If the opposite is true, Bollard remain bullish, then NZD may gain more ground...

    Also 4:00pm market is usually low in liquidity. Unless we get a surprise, it's probably best to stay out...

    Pre-News Considerations
    If NZD/USD spikes above the 0.7510 area, I may take a SELL trade. The overall long-term view for NZD is bearish, therefore the direction is definitely for a SELL.

    For more information on history charts and data of RBNZ Rate Decision...


    Thanks,


    [​IMG]
     
    #1 Henry Liu, Oct 26, 2010
    Lasted edited by : Sep 8, 2016
  2. DRBINTL

    DRBINTL Recruit

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    Sept. 15th??????
     
  3. stelore

    stelore Sergeant

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    Hello first time here for me.............

    I quote DRBINTL
    September the 15th?
     
  4. Huwee

    Huwee Corporal

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    Slight typo :)

    It's definitely today!
     
    #4 Huwee, Oct 27, 2010
    Last edited: Oct 27, 2010

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