The NZD/USD exchange rate jumped to the highest point since February 14 after the surprise rate hike by New Zealand’s central bank. It jumped to a high of 0.6376, which was ~4.75% above the lowest level in March.
RBNZ rate hike
The biggest forex news on Wednesday was the decision by the RBNZ to hike interest rates by 50 basis points. In its decision, the bank boosted rates to 5.25%, the highest point in years.
The bank attributed the hawkish tone to the need to bring interest rates to the 1-3% range in the medium term. This will be a toll order considering that inflation remains above 7% in the country. The bank also warned that the employment situation was beyond its maximum sustainable level.
Like the Reserve Bank of Australia, the RBNZ warned that New Zealand’s economic growth will be a bit weak this year. It attributed this to the elevated inflation, slow global growth, and tighter monetary policy conditions. The bank said:
“New Zealand’s economic growth is expected to slow through 2023, given the slowing global economy, reduced residential building activity, and the ongoing effects of the monetary policy tightening to date.”
The NZD/USD pair jumped after the latest RBNZ decision because the increase was bigger than the expected 0.25%. At the same time, it seems like there is a divergence between the Fed and the RBNZ considering that the Fed hiked by just 0.25% in its last meeting.
The next key catalyst for the NZD to USD exchange rate will be the upcoming US jobs numbers. On Tuesday, data showed that the country’s vacancies fell below 10 million in February. ADP will publish its private payrolls data on Wednesday while the official non-farm payrolls will come out on Friday.
NZD/USD technical analysis
NZDUSD chart by TradingView
The NZD/USD pair has been in a strong bullish trend in the past few days. And as I wrote in this article, the pair was forming an ascending triangle, whose upper side was at 0.6292. It then made a bullish breakout and reached a high of 0.6376, the highest point since February 14.
The pair is being supported by the 25-day and 50-day moving averages while the MACD and Relative Strength Index (RSI) are rising. Therefore, the pair will likely continue rising as buyers target the next key resistance point at 0.6500.
Ad
Looking to capitalise on rising & falling USD, GBP, EUR rates? Trade forex in minutes with our top-rated broker, eToro.
10/10
79% of retail CFD accounts lose money