NZD/USD – Kiwi falls to 2-week low, RBNZ rate decision looms

The New Zealand dollar continues to lose ground this week. In the North American session, NZD/USD is trading at 0.6592, down 0.27% on the day. On the release front, New Zealand Inflation Expectations remained steady at 2.0% in the first quarter. The indicator has held steady for five successive quarters. The New Zealand GDT Price Index slowed for a fourth straight release, falling to 0.4%. Later in the day, the RBNZ is expected to maintain the benchmark rate at 1.75%. The rate decision will be followed by a rate statement and press conference. In the U.S., JOLTS Job Openings improved to 7.49 million, beating the estimate of 7.35 million.

All eyes are on the Reserve Bank of New Zealand. With rate-setters expected to stay on the sidelines, investors will be keeping an eye on the rate statement and press conference. At the most recent policy meeting in March, the bank adopted a clear easing bias, sending a message to the markets that the next rate move would be lower. This dovish stance is a result of weakness in the global economy as well as softer domestic economic activity. The markets are expecting the RBNZ to hold rates for now, but that could change as early as the summer, if the economy does not improve.

U.S. President Donald Trump sent shock waves across the equity markets, after announcing on Sunday that the U.S. would raise tariffs on $200 billion worth of Chinese goods as early as Friday, from 10% to 25%. On Monday, Chinese officials had said it would cancel the talks, but this turned out to be an empty threat. Chinese Vice Premier Liu He is scheduled to lead a Chinese delegation to Washington. Will the new U.S. tariffs be rescinded? Treasury Secretary Steve Munchin said that the tariffs could be cancelled when the talks resume, so the markets could quickly rebound from the current slide.

NZD/USD Fundamentals

Monday (May 6)

• 23:00 New Zealand Inflation Expectations. Actual 2.0%
  
  

Tuesday (May 7)

• 10:00 US JOLTS Job Openings. Estimate 7.35M. Actual 7.49M
• 10:26 New Zealand GDT Price Index. Actual 0.4%
  
• 22:00 RBNZ Official Cash Rate. Estimate 1.75%
• 22:00 RBNZ Rate Statement
  
• 22:00 RBNZ Press Conference
  

*All release times are DST

*Key events are in bold

NZD/USD for Tuesday, May 7, 2019

NZD/USD May 7 at 13:00 DST

Open: 0.6608 Low: 0.6631 High: 0.6588 Close: 0.6592

NZD/USD Technical

NZD/USD posted small gains in the Asian session and continued with strong gains in European trade. The pair is steady in the North American session

• 0.6539 is providing support
• 0.6607 is a weak resistance line
• Current range: 0.6539 to 0.6607

Further levels in both directions:

• Below: 0.6539, 0.6424 and 0.6348
• Above: 0.6607, 0.6699, and 0.6793

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