New Zealand Dollar Poised to Rise Ahead of Unemployment, Inflation Data

THIS WEEK IN THE FOREX MARKETS

New Zealand Dollar Poised to Rise Ahead of Unemployment, Inflation Data

Upcoming employment and inflation data could buoy the risk-sensitive NZD ahead of the Reserve Bank of New Zealand’s interest rate decision on August 12.

With the central bank adapting their monetary policy levers to “maintain price stability and support maximum sustainable employment”, this week’s economic data may define the RBNZ’s short to medium-term outlook and could result in the adoption of a wait-and-see approach, mirroring the actions of their trans-Tasman counterparts at the Reserve Bank of Australia.

Although the RBNZ has hinted at the implementation of negative interest rates, the current rate of 0.25% is “currently the lower limit, given the operational readiness of the financial system for very low or negative interest rates”.

Therefore, should upcoming economic data points fulfil expectations, the Reserve Bank may keep monetary policy settings as-is, potentially allowing the New Zealand Dollar to continue its appreciation against its major counterparts.

NZDUSD MONTHLY CHART – BREAK OF 2014 DOWNTREND MAY IGNITE BUYERS

From a technical perspective, the New Zealand Dollar looks to be gearing up for a sustained push to the upside against its US counterpart, as price bursts through the 2014 downtrend and the RSI breaks above its midpoint for the first time in over two years. Read more...