The Reserve Bank of New Zealand, as expected, cut NZD official cash rate 0.25% to 2.00%.
Here are some key quotes from from RBNZ Governer Graeme Wheeler’s statement after the decision:
“Global growth is below trend despite being supported by unprecedented levels of monetary stimulus.”
“Monetary policy will continue to be accommodative.”
“A decline in the exchange rate is needed.”
You know what they say about doing the same thing over and over while expecting a different result?
Anyway, I guess central banks are starting to express how hopeless they feel in today’s low interest, highly politicised climate. This is one theme that doesn’t get enough of a run in financial media, and possibly the start of some sort of mini revolution in forcing fiscal policy support. But that’s one for another day!
Back on track and taking a look at the decision from a Forex trader‘s perspective and you would have noticed that across the Vantage FX blog and social media accounts, we’ve been watching how technical NZD/USD has been moving.
Following price bouncing out out of the higher time frame support zone, we were watching the intra-day levels for an entry to get long. With price never getting below the previous swing low, there were ample opportunities to take a long entry with a reasonably tight stop.
And following the RBNZ rally on a 0.25% rate cut (the new normal it would seem), longs got an extra potential +170 pips on the spike.
On the daily chart, price has now hit the previous swing high, and if you tick your chart back to the left, is also some past support/resistance worth taking notice of.
But with price still a long way off the top of that bullish channel, there’s still some serious room to the upside.
JPY Bank Holiday
NZD RBNZ Gov Wheeler Speaks
USD Unemployment Claims
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This is a guest post originally appeared on Vantage FX. Reposted with permission.