NZD/USD trades steadily in range after RBNZ kept OCR unchanged at 1.75% as widely expected and delivered no surprise to the markets. Governor Adrian Orr reiterated in the statement that “we expect to keep the OCR at this level through 2019 and into 2020.” He also kept the options open and indicated the next move could be “up or down”. Economic projections are “little changed” from the August MPS. Even though Q2 GDP was stronger than anticipated, Orr noted “downside risks to the growth outlook remain”. He concluded the statement by repeating “we will keep the OCR at an expansionary level for a considerable period to contribute to maximising sustainable employment, and maintaining low and stable inflation.”
NZD/USD’s rebound from 0.6500 lost momentum after hitting 0.6698 and turned sideway. While further rise still be seen, we’d expect strong resistance from 0.6726 to limit upside to complete the corrective rebound. On the downside, break of 0.6607 will bring retest of 0.6500 low.
In the bigger picture, with 0.6726 resistance in tact, outlook in NZD/USD stays bearish. Medium term down trend from 0.7436 is still in progress to 161.8% projection of 0.7557 to 0.6779 from 0.7436 at 0.6177. Nonetheless, considering bullish convergence condition in daily MACD, sustained break of 0.6726 will indicate medium term bottoming and bring stronger rebound.
