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At the policy meeting yesterday, Fed decided to keep the interest rate unchanged, as well as showed little sign that it is in a hurry to tighten the monetary policy due to a sluggish economy. However, The Fed also noted that labor market conditions had improved further. After the announcement, US equities rose, while the dollar dropped against the New Zealand dollar. Investors expect that Fed may go for the first rate hike of 2016 in September.
On Thursday, the Reserve Bank of New Zealand left the benchmark interest rate unchanged, at the current level of 2.25%, but hinted that further easing policy may be needed in case of weakening prices (falling inflation). The bank may move towards further monetary easing, in an attempt to maintain future inflation around the middle of the target range, according to Governor Graeme Wheeler.
The governor indicated that inflation is predicted to rise due to the effects of rising oil prices and the capacity pressure gradually being built. He also noted that the bank will closely focus on the country’s economic data. The New Zealand dollar gained as high as $0.6935 from around $0.6850 after the policy decision.
The market is waiting for weekly US jobless claims to be released today. The data is expected to rise around 4.45% compared with the week before. The number of unemployed people is an important signal for the economy as consumer spending is correlated with labor-market conditions. This is also a major consideration for monetary policy decisions.
Fig. NZDUSD D1 Technical Chart
The New Zealand dollar is on track to gain further against the US dollar and is currently trading at 0.69524. The pair NZDUSD is hovering around the area of Fibonaci 50.0. RSI is staying at level 56 and heading up, suggesting that the buying power is strong. The price is expected to hit the Fibonacci 61.8 area (around 0.71219) before witnessing a reversal.
Buy Digital Call Option at 0.69529 valid until April 29, 2016
Buy Digital Put Option at 0.7129 valid until April 29, 2016