- Grant Spencer, deputy RBNZ Governor
New Zealand central bank made two consecutive rate hikes over the last two months, bringing the official cash rate to 3.00%. The next meeting is scheduled for June 11 and according to the consensus forecast, policymakers will leave the monetary policy unchanged. The latest fundamentals are suggesting the economy is adjusting to a tighter monetary policy, as effect of higher interest rates are feeding through the economy. Nonetheless, during the last month's meeting, Graeme Wheeler and his deputy warned that further moves will be highly dependent on the exchange rate.
From the perspective of technical analysis, the pair is approaching a vital support at 0.8414. Aggregate technical indicators on the daily chart are sending ‘sell' signals, while indicators on longer timeframes are still pointing at pair's appreciation. Huge support at 0.8414 is also represented by the 50% Fibonacci level. A move below it will spur a deeper correction and will clear the way for 0.83-mark. At the same time, from the upside, bulls are facing strong resistance at 0.8482 and then 0.8500.
Keeping in mind recent depreciation of the Kiwi, as well as brighter economic outlook and growth optimism, the RBNZ can consider making another 0.25% rate hike. Earlier this year, analysts paired their bets on two more rate hikes during next three months.
© Dukascopy Bank SA