Global macro overview for 27/09/2017:
The Reserve Bank of New Zealand interest rate decision ( Official Cash Rate) might not be that importnat as global investors assume. The market consensus favors no change in the interest rate level, so it should stay at 1.75%. The ambiguous picture of New Zeland's economy favors a continuation of a rather cautious tone of RBNZ. The GDP accelerated in the second quarter from 0.5% to 0.8%, but the pace of growth is not strong enough, so it cannot create additional demand which, in turn, would lift up the inflationary pressures. The house market dynamic(very important for RBNZ) is decreasing, but overall still performing well. The job market is now nearly full, so wages might not accelearate much anytime soon. Another uncertainty is the fiscal policy, as the result of the parliamentary elections did not give any of the political party a majority.
In conclusion, the RBNZ will likely not create additional uncertainty just before Governor Wheeler's term is due and in general will reiterate its latest move from August. This means a cautious and neutral tone of the statement (the monetary policy will remain accommodative for a considerable period) and regards to the NZD, the bank should reiterate the dovish point of view: a lower New Zealand Dollar is needed to increase inflation and encourage more balanced growth. Any difference in tone of the statment will be a pretty big surprise for markets.
Let's now take a look at the NZD/USD technical picture on the H4 time frame. The price has broken below the golden trend line support and is currently trading close to the technical support at the level of 0.7166. in oversold market conditions. The most important support for bulls is still the level of 0.7131 and only a breakout below this level would trigger the continuation of the downtrend.
No comments:
Post a Comment