Kiwi Mildly Firm After Hawkish RBNZ Hike
ActionForex | Apr 24, 2014 04:07AM ET
New Zealand dollar is mildly higher after RBNZ raised the OCR by 25bps to 3.00% as widely expected. The accompanying statement is seen as generally hawkish. Growth is expected to be 3.5% in the year to March, comparing to 3.3% as stated in prior statement. Meanwhile, "spare capacity is being absorbed, and inflationary pressures are becoming apparent." And, inflationary pressures are expected to continue to increase "over the next two years". RBNZ also maintained a tightening bias and noted that "The speed and extent to which the OCR will be raised will depend on economic data and our continuing assessment of emerging inflationary pressures, including the extent to which the high exchange rate leads to lower inflationary pressure."
While NZD/USD did strengthen mildly after the announcement, it's held well inside range below 0.8744 short term top. More consolidation would likely be seen in near term. Also, note again that NZD/USD is facing strong resistance below 0.8842 historical high. While another rise might be seen, we'd expect limited upside potential and strong resistance from 0.8842 to bring reversal. NZD/USD is staying in multi-year sideway pattern from 0.8842 and break of 0.8500 will turn near term outlook bearish to 0.8051 and below to start another leg.
Elsewhere, Japan corporate service price index rose 0.7% yoy in March. China conference board leading indicator rose 1.2% in March. German Ifo will be the major focus in European session while Swiss will release trade balance. US will release durable goods and jobless claims later today.
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