- The NZD / JPY suffers a heavy blow while the RBNZ expresses its will to reduce the rates in negative territory.
- A convincing move below the 50-day average seems likely and could lead to stronger sales pressure.
The tone offered around the New Zealand dollar strengthened, pushing the NZD / JPY to 65.66 against 64.66 after the Reserve Bank of New Zealand (RBNZ) declared itself ready to cash more.
The central bank has said that a negative official liquidity rate (OCR), or benchmark interest rate, will become an option in the future.
The RBNZ’s desire to lower rates further validates Westpac’s forecast for negative rates by November. The central bank interest rate is currently 0.25%.
The accommodating comments on rates were accompanied by a standstill policy. The central bank left rates unchanged at 0.25% and extended the potential of the Large-Scale Purchasing Program (LSAP) to $ 60 billion, up from $ 30 billion, as expected.
In the longer term, the markets should assess the negative interest rate outlook in New Zealand, causing the NZD to fall against most of the majors.
From a technical point of view analysis From the point of view, the bias for NZD / USD would become bearish if the spot closed below the 50-day average of 64.72 on Wednesday. This will likely result in larger losses at 63.55 (May 7 low).