NZD/USD holds steady ahead of the RBNZ interest rate decision
- The NZD/USD price is wavering near the YTD high.
- The RBNZ started its first meeting of the year today.
- Analysts expect the bank to leave interest rates and QE unchanged.
The NZD/USD price is up for four consecutive days ahead of the Reserve Bank of New Zealand (RBNZ) interest rate decision. It is trading at 0.7330, which is the highest it has been since April 2018.
RBNZ decision preview
The NZD/USD has been in a strong upward trend in the past few months. The pair has risen by more than 34% from its lowest level in 2020, becoming one of the best performers.
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This trend is mostly because of the overall weak US dollar and New Zealand’s response to the pandemic. The country recorded only 25 deaths and about 2,000 infections.
The pair has also rallied because of the overall structure of the New Zealand economy. Unlike many comparable countries, it depends mostly on agriculture. During the pandemic, most of its key products like butter and cheese saw high international demand.
Today, the NZD/USD is rising ahead of the RBNZ interest rate decision that will come out tomorrow. Economists at most forex brokers don’t expect any significant change. They expect the bank to leave the overall interest rate unchanged at 0.25%. The bank has also launched a large quantitative easing program to push interest rates lower. In a recent meeting, NZIER, which runs a shadow board said:
“There was a wide range of views amongst board members. For the upcoming meeting, members were generally in favour of leaving the monetary policy stance unchanged given the improving outlook balanced against the high degree of uncertainty.”
Earlier today, the country’s statistics office released relatively weak economic numbers. The data showed that the overall retail sales declined by 2.7% in the fourth quarter after increasing by 28% in the previous quarter.
Before the meeting, the pair will react to an upcoming testimony by Jerome Powell. He will talk about the recent rising Treasury yields and the proposed $1.9 trillion stimulus package.
NZD/USD technical outlook
The NZD/USD has bounced back from the intraday low of 0.7300 to the current 0.7330. On the hourly chart, it has moved above the 25-day and 15-day exponential moving averages (EMA). It is also slightly below the important resistance at 0.7342. It is also slightly above the ascending green trendline. Therefore, the pair will likely continue rising as bulls target the year-to-date high of 0.7342.