New Zealand Dollar tumbles sharply today after the country reported one coronavirus case in the community in Auckland. The development suddenly bring some uncertainty back to RBNZ rate hike tomorrow. Overnight indexed swaps show inflation probability of a hike falling below 90%, down from 100% priced in before the news. NZD could suffer rather heavy selloff if RBNZ fails to deliver the rate hike expectation that it the markets up.
Some previews on RBNZ:
- RBNZ Preview – Raising Rate as Least Regrets Option
- RBNZ to Lift Rates, What to Expect
- Currency Pair of the Week: NZD/USD
The turn around in NZD is particular apparent against the also very week AUD. AUD/NZD is now back above 1.05 handle after hitting 1.0416 earlier in the day. Technically, the fall from 1.0944, as the third leg of the decline from 1.1042, is still in favor to resume sooner or later as long as 1.0597 support turned resistance holds. Break of 1.0416 will target 100% projection of 1.0402 to 1.0415 from 1.0944 at 1.0317. However, firm break of 1.0597 resistance should confirm near term reversal and target 1.0811 resistance next.
At the same time, should selling in NZD take off, NZD/USD would likely break through 0.6879 support to resume the fall from 0.7463. NZD/JPY would also break through 75.25 support to resume the decline from 80.17.
