3:00pm (NY Time) RBNZ Rate Decision Forecast 2.50% Previous 2.50%
ACTION: NZD/USD BUY 2.75% SELL Unchanged
RBNZ is expected to keep rates unchanged at the current level of 2.50% once again during today’s rate decision, as unanimously agreed by all economists surveyed, according to Bloomberg. As a matter of fact, there seems to be no fundamental reason supporting a rate hike for NZD in the near future, as the current inflationary target for NZD remains below the magical 2.0% level until perhaps 2011…
Concerns over the independence of the RBNZ has not benefitted the currency at all, as New Zealand’s opposition Labour party implied over recent publicity stunt. If the Labor party wins the 2011 elections, as analyzed by WSJ, we could see possible rate cuts in the future rate decisions as the focus will shift from maintaining inflation target to stimulate growth…
Therefore, the plan for tomorrow will be to wait for a surprise rate hike and get ready to jump in the market on a LONG NZD/USD trade… If we do not get that surprise rate decision, depending on the possible consolidation that we might see from USD over yesterday’s risk aversion driven moves, NZD/USD might be at a level where we could take a possible reversal based on “BUY on Rumor SELL on News”… however, I’d wait for RBNZ Bollard’s statement first before jumping into a trade.
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