Kiwi Jumps As RBNZ Turns Hawkish
Hawkish Shift
The Kiwi Dollar is rising firmly today on the back of the latest RBNZ meeting overnight. While the bank held rates steady at 2.25%, the voting split caught traders off-guard with an even in 3-3 split reflecting rising support for rate hikes. Indeed, the updated policy rate forecast from the bank echoed this hawkish shift with the bank now projecting its headline policy rate to hit 3% by early 2027 where previously it was projected to hit that level by the end of 2028. In the statement issued alongside the decision, policymakers warned that rates would likely need to rise sooner and likely by a higher amount than previously though as a result of rising inflation risks.
Iran War Impact
The shift in tone from the RBNZ reflects an environment of growing concern over lingering energy prices shocks amidst the ongoing Iran war. The major risk is that if a peace deal is not agreed soon and energy prices remain elevated or, in a worst case scenario, talks break down and war resumes leading energy prices higher again, inflationary pressures will last longer and push higher. In this scenario, the outlook for the RBNZ turns more aggressively hawkish, leading NZD higher. If a peace deal is agreed soon, however, and energy prices reverse heavily lower, this could alter the RBNZ view over the rest of the year, dampening NZD.
Technical Views
NZDUSD
For now, NZDUSD continues to trade around the mid-point of the large triangle pattern which has framed the recent range between roughly .5560 and .6105. If we push higher here. Initial resistance will be the triangle highs with the .5987 level just above. To the downside, the triangle lows and the .5696-level support.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.