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Today’s Trading Edge: NZD/USD tumbles after RBNZ keeps rates steady at record low

Posted by WorldWideMarkets . on May 10, 2017 6:31:48 PM

WWM NZDUSD MAY 10 2017.jpg

The Reserve Bank of New Zealand (RBNZ) kept the Official Cash Rate unchanged at 1.75%.  The kiwi fell 0.9% to .6833 after the Bank gave a more dovish message.  The RBNZ noted that monetary policy will remain accommodative for a considerable period. Numerous uncertainties remain and policy may need to adjust accordingly.

House price inflation has moderated further, especially in Auckland. The slowing in house price inflation partly reflects loan-to-value ratio restrictions and tighter lending conditions. This moderation is projected to continue, although there is a risk of resurgence given the continuing imbalance between supply and demand.

Price action on the NZD/USD daily chart highlights tumble as many analysts expected the RBNZ to raise their inflation outlook.  Since respecting the 50-day SMA in the middle of April, price has consolidated around the .6830 to .6970 region.  If price breaks below the .6800 level, we could see a major move down toward the .6750 level.  It is around that area that price could form a bullish ABCD pattern.  Key resistance remains .7000 to .7150 zone. 

The Trade: Buy NZD/USD at .6765 with a stop loss at .6715 and a take profit at .6815.  The Risk/Reward Ratio is 1:3 

Topics: NZD/USD, RBNZ Monetary Policy

 

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