Only 15 minutes before the Reserve Bank of New Zealand is expected to deliver the second rate cut to the nation’s benchmark lending rate in so many meetings, the NZDUSD technicals look very precise. A 240-minute (4 hour) frequency chart shows a clear descending wedge with the dominant trend backing a break to the downside. Support is marked at 0.66 as a 38.2% retracement of the September 2001 swing low to March 2008 swing high. At the same time, the short-term trend and former support level at 0.68 will be an immediate ceiling should the market show little to no response to the news.
A 25 basis point cut is already fully priced in. The greater uknown is which way Governor Alan Bollard’s commentary will lean. The market is pricing in 150 basis points of easing over the next twelve months, so there is likely a need for confirmation of yet another near-term rate cut.