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

RBNZ overview

Reserve bank of New Zealand (RBNZ) is up for releasing its latest interest rate decision, rate statement and the quarterly monetary policy statement today on 02:00 GMT. The event will be followed by a press conference by the Governor Adrian Orr wherein questions relating to the central bank’s future moves can be expected.

Considering recently rising calls favoring a rate cut from the RBNZ’s Orr, markets are looking for New Zealand bank to cut the official cash rate (OCR) by 25 basis points (bps) to 1.50% from 1.75% with a slightly dovish shift in the rate statement and mostly unchanged economic projections in the quarterly report to inflate the importance of upcoming monetary policy meetings.

Following the latest no rate-cut surprise from the Reserve Bank of Australia (RBA), various banks came out with their forecasts ahead of the event that shows mixed market sentiment.

Analysts at ANZ say,

Since the RBNZ’s dovish shift in guidance at the March OCR review, market pricing has been quite appropriately ebbing and flowing around the 50% mark for a cut in May. More analysts than not are now calling a May cut, but we’re not among them.

On balance we expect the Bank to deliver a dovish hold, presenting a downward-sloping OCR track and firming up its language around the likely impending need for additional monetary stimulus.

While TD Securities’ report mentions, 

All eyes on the RBNZ with OIS 56% priced for a cut. TD is in the minority looking for a dovish pause, while 14/20 analysts expect a cut. Compared with the RBA, the RBNZ has far less scope to revise down its GDP and CPI forecasts in the accompanying MPS — and thus should pause. We expect the new MPC to keep expectations high that the next move is down via a downgrade to its OCR forward guidance, whether they cut or not. In all, we look for a dovish hold based on the evidence, while many are calling for a cut due to Orr's bias, not the data flow.

How could the RBNZ affect NZD/USD?

With the no change in monetary policy at its largest customer, Australia, the RBNZ might follow the RBA’s footsteps and can peddle the NZD/USD pair a bit up initially. However, details from the quarterly monetary policy statement and press conference by the RBNZ’s Orr could offer further direction to the prices.

Technically, FXStreet Analyst, Valeria Bednarik, spots price moves under important moving averages and soft technical indicators to portray bearish momentum around April low of 0.6579.

The mentioned low is relevant, as below it, there's little in the way toward the yearly low set early January at 0.6549, this last, a more relevant support. Given that the market has already priced in a rate cut, a break below this last has fewer chances of taking place, yet if it happens, the decline may extend down to the 0.6500 price zone.

To the upside, the immediate resistance comes at 0.6630, this week high, followed by the 0.6660/70 price zone. The pair would need to consolidate above this last to be able to continue advancing short-term up to the 0.6700 region.

Key Notes

RBNZ Preview: will Orr & Co. follow RBA's lead?

NZD/USD: Little changed around 0.6600, all eyes on RBNZ

NZD/USD Technical Analysis: Remains vulnerable to slide further below YTD lows, towards 0.6550 area

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 raises 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.