Published: November 10, 2020 10:45 PM EST
by Richard Cason,
Fx Currency Analyst NewsmovesmarketsForex
NZDUSD Soared to the upside on the RBNZ interest rate news release, Republic Bank of New Zealand (RBNZ) leaves the Official cash rates unchanged at .25% on November 11, 2020.
The (RBNZ) Monetary Policy Committee convened and continued to implement its stimulus program through the FLP (Funding for Lending Programme. This program general purpose is to reduces the banks funding costs and lower interest rate for NZD banking communities and consumers. LSAP continues to purchase up to 100 billion.
“The committee also agreed to continue its Large Scale Asset Purchase (LSAP Programme and retain the Official cash Rate (OCR) at 0.25 percent in line with guidance March 16, 2020.”
Retail interest rates have declined with lower wholesale borrowing costs. It remains in the best long-term interest of the banking sector to promptly maximize the effectiveness of our LSAP programme.”
COVID-19 Pandemic effect on New Zealand Economy
Covid-19 continues to have a negative effect on the New Zealand Economy and presents a drag on inflation and employment levels. One positive note on news of a recent Vaccine development could bring some hope for things to make a turn for the best in the near future. “According to RBNZ Monetary Statement..”border restrictions will continue to curtail international trade and migration…prices for New Zealand’s exports have remained resilient, although export returns continue to be partly offset by the NZD exchange rate.”
NZDUSD Price action
Upon the RBNZ interest rate news release out of Wellington, New Zealand the NZD USD spiked down and tested support level of .06807 before pushing up 75 pips to .06883 around 9:45pm eastern standard time.
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The daily RSI is at 73 and the pair is trading at .06884 level as of 1115pm est. up 073% on the evening Tokyo trading session.
NZD USD WhipSaws from low of .6807 to.6888 After RBNZ allows Rates unchanged .25%
The Kiwi against its rival the Green Back is currently trading in a range between .6807 and .6889 in the evening Tokyo session as of close of the Trading on Tuesday, November 10, 2020.
The currency is trading well above the 100, and the 200 day Simple Moving Average and the Daily RSI is reading 73. as of this writing.
RBNZ OCR DECISION
The New Zealand Monetary Policy Committee Record of Meeting- Interim policy review said that …”The Committee noted staff advice that bond purchases under the LSAP programme had been effective at keeping yields low, and endorsed their recommendation to continue adjusting purchases as market conditions dictate. On Wednesday 11 November, the Committee reached a consensus to:
- hold the OCR at 0.25 percent, in accordance with the guidance issued on 16 March;
- maintain the existing LSAP programme of a maximum of $100b by June 2022; and
- direct the Bank to implement an FLP in early December 2020.
Economic activity since the August Monetary Policy Statement, both international and domestic, has proved more resilient than earlier assumed. In New Zealand this trend was evident across a range of indicators, including employment, household spending, GDP, and asset prices. These outcomes reflect the effectiveness of the health and economic policy responses to the initial shock.”
Reference:
Reserved Bank of New Zealand, (2020), Monetary Policy easing to continue Retrieved from https://www.rbnz.govt.nz/news/2020/11/more-monetary-stimulus-providedps
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