Investors will focus tomorrow on the Reserve Bank of New Zealand interest rates decision which will be announced on June 24, at 2:00GMT. RBNZ has changed the name of the “OCR” announcements to “Monetary Policy Review (MPR)” announcements.
What Analysts Expect From RBNZ
Analysts expect that RBNZ will keep the interest rates unchanged at a record low of 0.25% in tomorrow’s meeting on June 24. They also expect to leave the size of the Large Scale Asset Purchase programme (LSAP) at NZD 60 billion. RBNZ will keep the weekly pace of bond-buying programme around $1 billion in the near future.
RBNZ might be more optimistic about the New Zealand economic activity as per the previous projections, but definitely will stay cautious amid the coronavirus crisis impact on the global economy. RBNZ will also reiterate that might take more actions if needed in a second coronavirus wave scenario.
The Reserve Bank of New Zealand MPC’s in the last policy meeting on May 13, voted to expand the Large Scale Asset Purchase (LSAP) programme up to $60 billion, up from the previous $33 billion limit. The LSAP includes New Zealand Government Bonds, Local Government Funding Agency Bonds and, New Zealand Government Inflation-Indexed Bonds. RBNZ noted that economic activity in New Zealand had fallen sharply as a result of the coronavirus crisis and the lockdown measures. The sharp contraction in economic activity is expected to reduce inflation and employment below the RBNZ targets for several years.
NZDUSD is 0.07% higher at 0.6484, as the pair rebounds from the recent correction from the six-month highs. The long term technical outlook is bullish now as the pair trades above all significant daily moving averages. Assuming that we will not have any surprise form the RBNZ decision tomorrow, expectations are for the continuation of the recent uptrend.
On the upside, the initial resistance for NZDUSD stands at 0.6497 the daily high. If the NZDUSD bulls break above, then the next target for the pair would be at 0.6535 the top from June 11 trading session. More offers might emerge at 0.6586 the high from June 10.
On the flip side, immediate support will be met at 0.6437 the daily low. In case, the NZDUSD breaks below; the next support zone stands at 0.6383 the low from June 22 trading session. More bids would emerge at 0.6320 the 200-day moving average.