RBNZ Official Cash Rate Decision 10/28/09

4:00pm (NY Time)  RBNZ Rate Decision   Forecast 2.50%    Previous 2.50%
ACTION: NZD/USD        BUY 2.75%     SELL Unchanged

RBNZ is expected to leave rates unchanged at the current rate of 2.50%, as unanimously agreed by 11 economists surveyed, according to Bloomberg.  As a matter of fact, New Zealand’s economic outlook is still bleak, although NZD has appreciated over 32% in the past 6 months benefited from the surge in risk appetite  sentiment, but sentiment alone will not make RBNZ hike rates…

Here are some of the facts worth considering, NZ’s Prime Minister John Key spoke today on the high rate of exchange of Kiwi offsetting any inflationary concerns, and if RBNZ hikes rates in 2009, he would be “very surprised”…

On the other hand, Credit Suisse has priced in overnight swap for the RBNZ Cash Rate upwards of at least another 229 basis points (add another 2.25% or 4.50% official rate) by the next 12 months or so… This is obviously a long term view, pricing in the recovery of New Zealand’s economy.

Let’s face it, the only reason for traders to even talk about a possible rate hike is because of RBA’s surprise rate hike last month.  And usually RBNZ follows RBA’s policy, as both economies are very closely tied together.  But jugding from current situation, I think we’ll probably not see a rate hike…  And here is the plan:

If RBNZ hike rate, we’ll buy NZD/USD immediately.  If RBNZ leaves rate unchanged, then we’ll look to SELL NZD/USD, taking advantage of the “Buy on Rumor Sell on News” market reaction, if pre-market sentiment is NZD bullish.

I think the chances of getting in on a trade is about 85%, as we should see market volatility either way.

Related posts:

1. RBA Cash Rate Decision 11/02/09
2. RBA Cash Rate Decision Trading Plan 07/06/10
3. Trading RBA Cash Rate Decision 06/01/10
4. RBA Cash Rate Decision 04/06/10
5. RBA Cash Rate decision 03/01/2010
6. RBA Cash Rate Decision 11/30/09 (Interest Rate Decision)
7. Forex Trade Plan And Video For RBA Cash Rate Decision 08/03/10
8. RBA Cash Rate Decision 02/01/10
9. ECB Minimum Bid Rate Decision (Interest rate decision) 12/03/09
10. Forex News Trading For RBA Interest Rate Decision – 11/01/10

Tagged as: Basis Points, Credit Suisse, currency, current rate, Current Situation, economic outlook, economists, Fundamental News, fundamental outlook, Governor Bollard, Hike Rates, Interest rate, John Key, Kiwi, liquidity, market sentiment, Market Volatility, Matter Of Fact, NZ, NZD, Official Cash Rate, pre market, Prime Minister John, rate hike, Rate Of Exchange, RBNZ, risk appetite, sentiment, Surprise Rate, USD