Published: June 27, 2020 11:00 AM EST
by Richard Cason, Editor NewsmovesmarketsForex
Republic Bank of New Zealand (RBNZ) leaves the Official cash rates unchanged at .25% on June 24, 2020.
The (RBNZ) Monetary Policy Committee convened earlier this week and continued to double down on aggressive alternative monetary policy measures. Large Scale Asset Purchase programme (LSAP) of 60 Billion of varies government backed security assets.
The purchased assets were New Zealand Government Bonds, Local Government Funding Agency Bonds, and NZ Government inflation-index Bonds. The committee said that, “the LSAP programme aimed at keeping interest rates low for the foreseeable future.” “The LSAP programme aims to continue to reduce the cost of borrowing.
Retail interest rates have declined with lower wholesale borrowing costs. It remains in the best long-term interest of the banking sector to promptly maximise the effectiveness of our LSAP programme.”
COVID-19 Pandemic Stagnates New Zealand Economy
The committee emphasized that this measures were put in place to thwart the negative effective of the COVID-19 Pandemic which has unilaterally stagnated New Zealand’s employment, international trade, economic activity, and inflation rate. The Virus continues to be an absolute menace for the New Zealand international trade exploits.
This phenomenon is due to the global travel restriction as well as the appreciating New Zealand dollar has placed on the exchange rate; whereby administering unstable pressure on NZD export earnings.
NZD USD Price Action
Upon the RBNZ interest rate news release out of Wellington, New Zealand the NZD USD spiked to 0.6512 before descending to 0.6403 handle on June 24, 2020. NZD USD retreats 119 pips, and continues to range trade between 0.6449 and 0.6400 levels.
The daily RSI is at 55.34 and the pair closed on Friday, June 27, 2020 at 0.6419 down 0.16%. With vary minimum New Zealand news events scheduled on the calendar excluding, ANZ Business Confidence (Jun) and other low impact events this week, the Kiwi sentiment appears to be bearish thus far.
NZD USD WhipSaws from .6512 to low of .6448 After RBNZ allows Rates unchanged .25%
The Kiwi against its rival the Green Back is currently trading in a range between .6449 and .6400 in the U.S. trading session as of close of the Trading week Friday, June 26, 2020.
The currency is trading well above the 100, and the 200 day Simple Moving Average and the Daily RSI is reading 54.34 as of this writing.
Marc Chandler, Bannockburn Global Forex, Managing Partner and Chief Market Strategist Fresh Take on June’s 2020 RBNZ Interest Rate Decision
Marc Chandler is a renown leading political economist and a foreign exchange market analyst, writer, speaker, and professor. also frequent guest on CNBC, Bloomberg Television, and FOX Business offers his exclusive perspective and insights for News Moves Markets Forex June 24, 2020 Republic Bank New Zealand Interest Rate Decision:
NEWSMOVESMARKETSFOREX.
Marc, Give me your thoughts on the NZD weighted currency regarding the lastest monetary policy board meeting keeping over- the counter cash rate the same?
MC,
“Market knew RBNZ was on hold. It did not surprise. Risk off in the region plus comments by te central bank complaining about the Kiwi’s strength cutting export earnings gave short-term momentum traders a reason to take profits on 1.3% rally Mon-Tues. Kiwi was trade near 59 cents in mid May and rallied to almost $0.6600 June 9-10, when downside correction began. I suspect correction not over. Next big target below Monday’s low of around $0.6375 is the 200 day moving ave near $0.6325, which is also initial retracement objective (38.2%) of run up since mid-May.”
RBNZ OCR DECISION
The New Zealand Monetary Policy Committee Record of Meeting- Interim policy review said that …”financial markets are functioning well and that the NZ government bond yield curve has flattened. The Committee noted that mortgage rates have declined since the May Statement, reducing the cost of borrowing for households and businesses.
Members noted that these mortgage rate declines have been accompanied by similar declines in deposit rates. However, the Committee agreed that it is not yet clear whether the monetary stimulus delivered to date is sufficient to meet its mandate. Members discussed risks to the economic outlook.
It was noted that risks remain skewed to the downside as outlined in the May Statement, despite the marginally stronger starting point for the New Zealand economy. Due to worldwide uncertainty about the pandemic containment, the possible negative outcomes remain severe and larger than any near-term upside surprises.
Added to these concerns was the challenge of phasing out various Government support schemes – in particular the wage subsidy – which could lead to further job losses.
The Committee agreed that the labour market is severely disrupted, with data on wages, hours worked, participation, and utilisation all important for assessing aggregate demand and supply capacity.”
Reference:
Reserved Bank of New Zealand, (2020), Monetary Policy easing to continue Retrieved from https://www.rbnz.govt.nz/news/2020/06/monetary-policy-easing-to-continue
Chandler, M. (2020, June 26), Interview with Marc Chandler Fresh Take on June’s 2020 RBNZ Interest Rate Decision (interview by Richard F. Cason, Founder & Editor for NewsMovesMarketsForex).
#usdnzd #newsmovesmarketsforex #traders #currencymarkets #nzdnews #rbnz #forextrading
