New Zealand interest rate decision due at 5:00 PM. NZDUSD comes off year highs today. No change expected.
The Reserve Bank of New Zealand will announce the results of their monthly interest rate decision. It is expected that rates remain unchanged at 2.5%. The RBNZ has lowered the key interest rate from 8.25% in June 2008 to the current level – an unprecedented decline.
At the last meeting RBNZs Bollard did comment on the value of the New Zealand dollar. He also commented that there exists the possiblity for further modest declines in interest rates in the coming quarters. Since that time the currency has continued to rise from around 0.6600 to 0.6950. Today the NZDUSD reached a high at .07006. This is the highest level since August 27th.
From a technical perspective the price moved above the 61.8% retracement of the move down from the March 2008 high of 0.8213 to the February 2009 low of 0.4892. That level comes in at the 0.6944 level. With the current price trading at 0.6951, the market is likely to use this retracement level as a pivot point for the trade tonight – a move above is bullish for the pair, a move below is bearish for the pair. On the shorter term chart (see below), the price is currently below the 100 and 200 bar moving average with choppy action above and below the lines today.
A move lower tonight may have some support against the 100 hour MA at the 0.6902 level. The 200 hour MA comes in at 0.6851. Watch these levels – especially the 200 hour MA where both the 50% retracement and the 200 hour MA are both located (see chart below).
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