NZD/USD on a bumpy road ahead the RBNZ rate decision

The NZD/USD continued to trade sideways as investors refocus on the upcoming Reserve Bank of New Zealand (RBNZ) decision and the country’s reopening. The pair is also struggling as the Delta variant continues spreading in the Asia-Pacific region.

RBNZ decision ahead

The New Zealand economy has staged a strong recovery because of the rising demand for the country’s key agricultural products. It has also recovered because of the fact that the country has not had any Covid infections in the past few months.

As a result, the country has published strong economic numbers recently. Its unemployment rate has declined substantially in the past few months. Also, New Zealand retail sales have risen while the country has continued to increase its imports and exports.

The biggest concern for New Zealand is that the country has suffered from little forein travel. This has seen many of its restaurants and hotel industry suffer. Still, this could soon change now that the country sets out the path to reopen. 

In a statement, the government said that it will speed up its vaccine rollout and then start a phased reopening in early 2022. The country’s borders have been closed since the pandemic started and locals returning from abroad are required to isolate.

The next key catalyst for the NZD/USD will be the upcoming RBNZ interest rate decision. Analysts at ING expect the central bank will hike interest rates by 25 basis points in this meeting. If this happens, it will become the first developed country to hike the interest rate. The bank ended its quantitative easing in July.

This is primarily because the country has already gone to its pre-pandemic levels. For example, the number of employed people has risen to more than 2.78 million, which as higher than the pe-pandemic level of 2.715 million. Its inflation has risen from 1.9% to 3.3%.

NZD/USD technical analysis

The NZD/USD pair has been under pressure in the past few days. The pair has moved from a high of 0,7088 on August 8 to the current 0.700. Along the way, the pair has moved below the important level at 0.7045. It has also moved below the 25-day and 50-day moving averages. It is also slightly above the neckline of the double-top pattern. Therefore, the pair will likely keep dropping as bears target the lower side of the channel at0.6922.