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NZD/USD steady ahead of RBNZ rate announcement

Started by PocketOption, May 28, 2024, 04:44 am

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PocketOption

NZD/USD steady ahead of RBNZ rate announcement

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The New Zealand dollar is almost unchanged on Tuesday. NZD/USD is down 0.06%, trading at 0.6102 in the European session at the time of writing.


RBNZ expected to maintain cash rate


The Reserve Bank of New Zealand has shown it can be patient, having held the cash rate at 4.35% for six straight times. The central bank is expected to maintain rates yet again at Wednesday's meeting as inflation has remained stubbornly high.


Inflation has been moving lower and fell to 4% in the first quarter, down from 4.7% in the fourth quarter of 2023. However, this remains double the midpoint of the 1-3% target range and is too high for the RBNZ to start trimming rates in the near-term.


At the same time, economic data for the first quarter was soft which should result in disinflation. The unemployment rate rose to 4.3% in the first quarter, private wage growth decelerated and GDP contracted by 0.1% q/q.


The RBNZ had its mandate limited to inflation in December; previously, the central bank was mandated to maintain low inflation and full employment. Still, the strength of the labor market and wage growth will be eyed by the central bank as it determines its rate policy.


The Federal Reserve continues to sound hawkish about rate policy and remains cautious about rate cuts. On Monday, Fed Vice Chair Philip Jefferson said that it was too early to tell if the downtrend in inflation would be "long lasting". Fed Vice Chair of Supervision Michael Barr said that first-quarter inflation data was disappointing and was not supportive of easing monetary policy. For a second straight day, there are no US economic releases and we'll hear from a host of FOMC members, which could provide insights about the Fed's rate policy plans.


NZD/USD Technical



  • NZD/USD is tested support at 0.6089 earlier . Below, there is support at 0.6039

  • 0.6185 and 0.6235 are the next resistance lines



Source: NZD/USD steady ahead of RBNZ rate announcement