{"id":144531,"date":"2019-03-27T11:50:52","date_gmt":"2019-03-27T15:50:52","guid":{"rendered":"https:\/\/www.countingpips.com\/?p=144531"},"modified":"2019-03-27T11:50:52","modified_gmt":"2019-03-27T15:50:52","slug":"rbnz-sparks-audnzd-reversal-but-will-the-rba-retaliate","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex\/2019\/03\/rbnz-sparks-audnzd-reversal-but-will-the-rba-retaliate\/","title":{"rendered":"RBNZ Sparks AUDNZD Reversal, But Will The RBA Retaliate?"},"content":{"rendered":"
March 27, 2019<\/div>
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By <\/strong>Orbex<\/strong><\/a><\/p>\n

The New Zealand Dollar was sold heavily overnight in response to the latest monetary policy meeting from the\u00a0RBNZ<\/strong>.<\/p>\n

While rates were kept unchanged, it was the\u00a0heavy dovish skew<\/strong>\u00a0to the statement which contained many changes from last time around, that rattled the kiwi.<\/p>\n

Key quotes from the statement:<\/strong><\/p>\n

In its latest assessment, the RBNZ noted a\u00a0\u201cweaker global economic outlook\u201d<\/strong>\u00a0and \u201creduced momentum in domestic spending\u201d as reasons why \u201cthe more likely\u201d next move in rates is down.<\/p>\n

Weaker Global Economy<\/strong><\/h2>\n

Expanding on this, the RBNZ explained:<\/p>

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\u201cThe global economic outlook has continued to weaken, in particular amongst some of our\u00a0key trading partners including Australia, Europe, and China<\/strong>. This weaker outlook has prompted central banks to ease their expected monetary policy stance, placing\u00a0upwards pressure on the New Zealand Dollar\u201d.<\/strong><\/p><\/blockquote>\n

Weaker Domestic Growth<\/strong><\/h2>\n

The statement also noted:<\/p>\n

\u201cDomestic growth slowed in 2018,<\/strong>\u00a0with softness in the\u00a0housing market<\/a>\u00a0and weak business investment contributing\u2026 We expect ongoing low-interest rates and increased government spending and investment to support economic growth over 2019\u201d<\/p><\/blockquote>\n

Downside Risks Growing<\/strong><\/h2>\n

Finally, the statement concluded:<\/p>\n

\u201cThe balance of\u00a0risks<\/strong>\u00a0to this outlook has\u00a0shifted to the downside.<\/strong>\u00a0The risk of a more pronounced global downturn has increased and low business sentiment continues to weigh on domestic spending.\u201d<\/p><\/blockquote>\n

However, the RBNZ did note that \u201con the upside, inflation could rise faster if firms pass on cost increases to prices at a greater extent\u201d.<\/p>\n

Pressure Mounts on The RBA<\/strong><\/h2>\n

The tone of the statement marks a\u00a0dramatic escalation in dovishness by the RBNZ<\/strong>\u00a0which had been keeping a more neutral tone recently. Comments to the likelihood of a rate cut have been\u00a0effective in pushing NZD lower.\u00a0<\/strong>Indeed,\u00a0they<\/strong>\u00a0could also prompt a response from other\u00a0<\/strong>central\u00a0banks<\/strong>.<\/p>\n

This new change in policy guidance comes on the back of the RBA shifting its view. Previously, the RBA had forecast that its next move in rates would be higher. However, in light of the recent\u00a0worsening in global growth<\/a>, it altered this view to say that a rate cut was just as likely.<\/p>\n

It will be interesting to hear from the RBA next time around now. Following the RBNZ meeting and the subsequent rally in AUDNZD, the\u00a0RBA<\/strong>\u00a0will be closely watching.<\/strong><\/p>\n

Technical Perspective: AUDNZD Challenging Key Trendline<\/strong><\/h2>\n

\"audnzd\"<\/a><\/p>\n

The higher time frame daily chart in AUDNZD shows the extent of the shift in price overnight. AUDNZD is currently undergoing its largest positive day since July 2018 (excluding the recovery rally off the flash crash lows last year). Price is currently challenging the bearish trend line from October 2018 highs. This coincides with structural resistance at the 1.0449 level. Above here, focus will be on a test of the longer-term bearish trend line from 2018 highs next. This will be ahead of the next big structural level at 1.0508, a break of which could spell the start of a broader regime change in AUDNZD.<\/p>\n

\"h4<\/a><\/p>\n

Dropping down onto the H4 charts you can see just how sharp that move was overnight. Price spiked around 140 pips higher. If we do see any retracement from here, bulls will be looking to use a retest of the 1.0373 breakout zone as a platform for a further topside run. On the other hand, a break back below the level would likely spell the end of the upside move.<\/p>\n

By <\/strong>Orbex<\/strong><\/a><\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

By Orbex The New Zealand Dollar was sold heavily overnight in response to the latest monetary policy meeting from the\u00a0RBNZ. While rates were kept unchanged, it was the\u00a0heavy dovish skew\u00a0to the statement which contained many changes from last time around, that rattled the kiwi. Key quotes from the statement: In its latest assessment, the RBNZ […]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-144531","post","type-post","status-publish","format-standard","hentry","no-post-thumbnail"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/144531","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/comments?post=144531"}],"version-history":[{"count":2,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/144531\/revisions"}],"predecessor-version":[{"id":144537,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/144531\/revisions\/144537"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/media?parent=144531"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/categories?post=144531"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/tags?post=144531"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}