NZ Dollar Falls Below 69 after RBNZ Hike

The New Zealand dollar sustained sharp losses on Wednesday. NZD / USD is currently trading at 0.6892, down 0.84% ​​on the day.

RBNZ rate raises kiwi lower

At the November policy meeting, the RBNZ raised tariffs for a second straight month, as promised. Politicians probably didn’t expect the decision to send the New Zealand dollar for a fall, but investors were clearly not impressed with the 0.25% rate, which brought the policy rate to 0.75%. The markets were priced in a move of 0.25%, but there was disappointment from those traders who hoped the central bank would show an aggressive side and rise by 0.50%.

The New Zealand dollar has taken it on the chin, although the bank has signaled that it will have to tighten policy faster than expected to contain inflation. The RBNZ is now forecasting tariffs to rise to 2% by the end of 2022, a full year ahead of the previous projection in August. The tax rate noted that “the economy continues to operate above its current potential” and that employment was “above its maximum sustainable level”. In other words, the bank is clearly concerned about the overheating of the economy, and will raise rates to prevent that from happening.

The next policy meeting is not until February, so the New Zealand dollar, which is down 3.89% in November, will have to seek support elsewhere in the meantime. After the decision, Governor Orr said the bank would act cautiously and planned to tighten in 25 bps increments “for now”. Inflation will certainly be in the minds of Orr and his colleagues, as inflation is currently at 4.9% and the RBNZ projects it to hit 5.7% in the fourth quarter.

NZD / USD Technique

• There is resistance at 0.6958 and 0.7059
• NZD / USD is falling sharply and continues to break below support levels. There is support at 0.6857, which has been holding since late August. Below, 0.6747 is a monthly support level