NOV 22, 2021
- RBNZ monetary policy decision
- Strong New Zealand economic data pushes for 0.50% hike
Chart 1: NZD/JPY H4 chart
The Reserve Bank of New Zealand (RBNZ) will be announcing their monetary policy this Wednesday. With the expectation that the central bank is going to hike interest rate, the question to ponder on is whether it will be a 0.25% hike or a 0.50% hike. Recent economic data releases from New Zealand have been strong, hence supportive of a 0.50% hike. During the third quarter of this year, annual inflation rose by 2.2%, faster than the previous 1.3%. Also, the jobs report showed that employment in the third quarter doubled from the second quarter while unemployment rate fell way below the pre-pandemic level. On top of that, the New Zealand housing market is currently on fire and as the RBNZ Governor Adrian Orr puts it in his recent speech, prices are currently unstainable and posed risks to the country’s financial stability.
NZD/JPY has been trading within a 120pip range for more than a week. A 0.25% rate hike may send a disappointing tone across the market, causing NZD/JPY to weaken. Whereas a 0.50% hike may lead to a more sustained strengthening of the New Zealand dollar. Either way, NZD/JPY may break out of the current range, presenting trading opportunities.
Trade Setup for NZD/JPY (H4)
Buy Stop at 80.80
Sell Stop at 79.30
Upcoming news that may impact price movement of NZD/JPY
23 November – New Zealand Retail Sales q/q data release at 0545 (GMT+8)
24 November – Japanese Flash PMI data release at 0830 (GMT+8)
24 November – Reserve Bank of New Zealand monetary policy decision announcement at 0900 (GMT+8)
24 November – Reserve Bank of New Zealand press conference at 1000 (GMT+8)
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