NZDUSD: The RBNZ Gets Serious!

The RBNZ releases property cooling measures setting up rate cuts and a lower NZD.

This morning, the Reserve Bank of New Zealand (RBNZ)has released a consultative paper, stating that it intends to enact new macro-prudential measures nationwide to mitigate systematic risks to bank from mortgage lending. In a nutshell, the main points are

1. No more than 5 percent of bank lending to residential property investors across New Zealand would be permitted with an LVR of greater than 60 percent (i.e. a deposit of less than 40 percent).

2. No more than 10 percent of lending to owner-occupiers across New Zealand would be permitted with an LVR of greater than 80 percent (i.e. a deposit of less than 20 percent).

3. Loans that are exempt from the existing LVR restrictions, including loans to construct new dwellings, would continue to be exempt.

Press release here.  Press Release
Consultation Paper here. Consultation

The rules will come in in a very rapid six weeks on September the 1st.

By doing this the RBNZ is attempting to remove one of its main roadblocks monetary policy wise. Ie how to cut rates in a low inflation environment when the housing market is on fire. With a low print on CPI, yesterday and the RBNZ update on Thursday one expects that there will now be a serious talk from them vis-a-vis the level of the NZD and their intentions re interest rate cuts. It is hard to interpret it any other way then they will say the NZD is too high and that we can expect a cut at the August meeting and another one later in the year.

Certainly, that is what the street is thinking as NZD 2 year swaps make new lows this morning and the NZD falls 80 points to 7030. There is certainly no good news on the charts this morning for NZD.

Our old friend NZD/CAD weekly. Neckline resistance held at 9530.

Support now at 9090.

 

NZDCAD

NZD/USD weekly. Double top at 7305, 100 weeks moving average at 7115.

Support at the top of weekly cloud at 6917.

NZDUSD

NZDJPY daily. Testing support here at 74.60. Next support 7410.
Resistance at 74.90 cloud base and the 100-day moving average.

NZDJPY

AUDNZD daily. Goodness me what a rally this week! Resistance at 1.0800 100DMA and then cloud top and 200 DMA at 1.0840. Support at 1.0630

Support at 1.0630, bottom of the cloud.

AUDNZD

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Jeffrey Halley
Based in Singapore, Jeffrey has over 25 years experience in the financial markets, having traded currencies, options, precious metals and futures. Jeffrey started his career at Barclays Bank in New Zealand. However he has spent most of it in London and Asia.Jeffrey focuses on the Asia time zone across asset classes. A regular commentator on business news TV and Radio, he is originally from New Zealand and holds an MBA from Cass Business School, London.