NZD/USD erases RBNZ-inspired upsurge, trades below 0.6300
- RBNZ left policy rates unchanged at 1% on Wednesday.
- RBNZ noted new information did not warrant a significant change to policy outlook.
- US Dollar Index advances above 98.70 following Tuesday's fall.
After the Reserve Bank of New Zealand (RBNZ) on Wednesday announced that it kept the policy rates, Official Cash Rate (OCR), unchanged at 1%, the NZD/USD pair jumped to a fresh weekly high of 0.6350 but failed to preserve its momentum. With the broad-based USD strength putting the pair under bearish pressure in the remainder of the day, the pair dropped below the 0.63 handle and was last seen trading at 0.6295, erasing 04% on a daily basis.
RBNZ seems to be cautiously optimistic
In its policy statement, the RBNZ noted that the Committee agreed new information did not warrant a significant change to policy outlook. The positive impact of the policy announcements faded away quickly as experts don't see enough evidence of a stronger economy.
Commenting on the RNZ decision, "Although the RBNZ offered a contingent easing bias and a balanced outlook 1 year out, we retain our 25bps cut to 0.75% in November," said TD Securities analysts.
"We see downside risks to domestic growth and susceptibility to weaker offshore conditions as likely catalysts for a Nov cut to 0.75%.”
On the other hand, following Wednesday's drop, the US Dollar Index gathered strength as major European currencies came under a renewed pressure and caused the pair to extend its slide in the last few hours. At the moment, the US Dollar Index is up 0.4% on the day at 98.73.
Technical levels to watch for