23 Jul 2015
NZD/USD retraces 50% of its RBNZ-driven rally
FXStreet (Bali) - NZD/USD has retraced over 50% of its RBNZ-induced rally, failing to take out stop loss orders reported above 0.6650 to instead edge gradually lower, accelerating in the last hour, to now exchange hands at 0.6605 session lows.
RBNZ cuts and sticks with dovish rhetoric but not enough...
As per the RBNZ monetary policy decision, the initial rally in the Kiwi came courtesy of a less dovish-than-expected outcome, as despite a 25bp with unambiguous clues that further rate cuts should be justified, the market had obviously been anticipating a 50bp cut. RBNZ Governor Wheeler said: "A reduction in the OCR is warranted by the softening in the economic outlook and low inflation. At this point, some further easing seems likely."
NZD/USD outlook: Rallies to be limited
The fact that doors were left wide open for a further decrease in rates, implies that the market should remain actively trying to engage in NZD downside bets, with any additional strength likely to fade. At present, the line in the sand in which, if re-taken, sellers should get the upper hand again, is an hourly close below 0.66 psychological handle. While above, some buying activity may re-emerge, with gains only to accelerate should 0.6650 be re-gained; even if so, it might be be a quick visit to grab some liquidity before sellers re-engage.
RBNZ cuts and sticks with dovish rhetoric but not enough...
As per the RBNZ monetary policy decision, the initial rally in the Kiwi came courtesy of a less dovish-than-expected outcome, as despite a 25bp with unambiguous clues that further rate cuts should be justified, the market had obviously been anticipating a 50bp cut. RBNZ Governor Wheeler said: "A reduction in the OCR is warranted by the softening in the economic outlook and low inflation. At this point, some further easing seems likely."
NZD/USD outlook: Rallies to be limited
The fact that doors were left wide open for a further decrease in rates, implies that the market should remain actively trying to engage in NZD downside bets, with any additional strength likely to fade. At present, the line in the sand in which, if re-taken, sellers should get the upper hand again, is an hourly close below 0.66 psychological handle. While above, some buying activity may re-emerge, with gains only to accelerate should 0.6650 be re-gained; even if so, it might be be a quick visit to grab some liquidity before sellers re-engage.