When is the RBNZ and how could it affect NZD/USD?

RBNZ overview

The RBNZ decision will come out at 5 PM ET today just after US traders head out of the door. However, there are no surprises expected. The RBNZ is expected to remain on hold at 1.75% in today's Monetary Policy Statement, but rhetoric from the Antipodean central banks recently has been on the dovish side, as noted by analysts at Brown Brothers Harriman.  

Analysts at Westpac explained that developments since the May MPS have been net negative relative to the RBNZ’s forecasts: "...Weaker GDP, inflation, house prices, and a higher NZD; only partly offset by stronger export prices, fiscal policy and migration. We expect the OCR forecast to be flattened (removing the rise in early 2020) but the policy guidance paragraph to be largely unchanged: “Monetary policy will remain accommodative for a considerable period. Numerous uncertainties remain and policy may need to adjust accordingly.” This is probably close to the market’s expected outcome, and forms our neutral scenario (a 65% chance of occurring, we think)," argued the analysts at Westpac.

How could the RBNZ affect NZD/USD? 

NZD/USD has fallen for four straight days, seven of the past eight, and ten of the past thirteen days.  "The July low near 0.7200 is the next target, but the key level is 0.7100.  Break below would suggest a test of the May low near 0.6820," explained analysts at Brown Brothers Harriman. 

The analysts at Westpac's hawkish scenario (5% chance) takes the form of an unchanged OCR forecast and largely unchanged guidance language. "Markets would be disappointed, and 2yr swap rates could rise by 10bp, NZD/USD around 1c," suggested the analysts. 

The next near term supports come as 0.7300, 0.7280, (11th July high), 0.7205/06 June 22/21 lows; 0.7186 June 15 low; 0.7150 June 5 high; 0.7127 June 6 low and 0.7100.  On the flip side, 0.7370 (recent high) remains the first resistance. 0.7420/25 ahead of the key 0.7440 and 0.7480 thereafter comes as the next near-term resistance areas. 0.7520/25 double top highs are ahead of the 21st July high at 0.7557. In a continuation, 0.7744 were the April 2015 highs ahead of the opening highs for that year at 0.7889.

Key notes:

• NZD/USD: bulls holding the 0.73 handle ahead of RBNZ
• RBNZ: will be in no hurry to tighten - Nomura

About the RBNZ interest decision and statement

The RBNZ interest rate decision is announced by the Reserve Bank of New Zealand. If the RBNZ is hawkish about the inflationary outlook of the economy and rises the interest rates it is positive, or bullish, for the NZD. The RBNZ rate statement contains the explanations of their decision on interest rates and commentary about the economic conditions that influenced their decision.