Well, the RBNZ certainly isn’t joking around with markets this time. Having firmly stated their ambitions for an extra release to provide an update on economic conditions, creating the right atmosphere for banks to cut rates below 2.00%.
This release comes on the back of plans to tighten restrictions on lending for home buyers and investors. (As we went through on Monday, investors will essentially need a 40% deposit to get their foot into the heavily overcooked housing market in the country’s major cities). The idea being this being that the RBNZ can now slash interest rates further to tackle low inflation without throwing more wood on the burning fire that is the housing market.
RBNZ; Further policy easing will be required, mon pol will remain accomodative; NZD exchange rate is too high https://t.co/m3WUklOnMz
— Livesquawk (@Livesquawk) July 20, 2016
We saw what this did to NZD/USD on Monday and today’s price action has been very similar.
NZD/USD 4 hour
Smooth, dovish communication by the RBNZ has seen NZD/USD step down nicely between S/R levels, retesting previous support as resistance as it drops.
Price has now hit the next obvious level for you to manage your risk around here. As always be wary of fighting momentum and trying to catch the falling knife. Support is only support if it holds!
Lastly, I wanted to revive the chart of the day section of the morning blog and take a look at Gold.
The weekly shows the bounce that everyone’s been talking about with a key long term horizontal level thrown in to try and break through the short term noise.
The level lines up nicely with the most recent price action on the daily chart, acting as swing high resistance and being respected as support following the first breakout.
Bulls, be aware that price has rejected off weekly trend line resistance, but as always, I’m viewing this higher time frame line as highly subjective. A few charts I’ve seen around the place have all used different points to draw their trend line so view it as a zone rather than a hard level.
GBP Retail Sales m/m
EUR Minimum Bid Rate
EUR ECB Press Conference
USD Philly Fed Manufacturing Index
USD Unemployment Claims
This is a guest post originally appeared on Vantage FX blog. Reposted with permission.