The RBNZ rate decision turned out to be much more dovish than expected. Governor Adrian Orr’s statement indicated there is no rush to lift interest rate. And the central bank downgraded inflation forecast for 2019 and 2020. The downgrade of 2019 and 2020 GDP forecasts was quite significant too. RBNZ is now expected to stand pat at least until mid-2019.
Given that, NZD tumbled broadly after the release. NZD/USD drops to as low as 0.6915 so far. 161.8% projection of 0.7436 to 0.7152 from 0.7394 at 0.6934 is firmly taken out. And our counter trend long position mentioned here will likely be stopped out with a loss. NZD/USD would now target 0.6779 low after sustaining below 0.69 handle.
AUD/NZD surges to as high as 1.0795 and hit 38.2% retracement of 1.1289 to 1.0486 at 1.0793. Based on current momentum, rise from 1.0486 will now likely extend to 61.8% retracement at 1.0982 and above. As AUD/NZD is, after all, staying in long term range trading, strong resistance could be seen above 1.0982 to bring reversal to extend the range pattern.
