08.11.201716:46 Forex Analysis & Reviews: Global macro overview for 08/11/2017

Market participants expect the RBNZ to maintain its key interest rate at 1.75% together with the neutral outlook for the monetary policy. NZD has undergone a strong influence on political risk, which seems a little exaggerated. With such a neutral position, optimistic RBNZ may be a pretext for short positions on NZD and short-term currency support.

Recently data from New Zealand has been positive since the last meeting. First of all, CPI inflation in the third quarter rose to 1.9% from 1.7% while the unemployment dropped to 4.6% with wage growth up to 1.2%. In addition, the NZD rate has clearly weakened under the influence of political uncertainty after the parliamentary elections, which will be welcomed by the RBNZ. Risk is the deterioration of business and consumer confidence indicators due to prolonged coalition negotiations. Overall, however, the state of the economy allows the RBNZ to be optimistic about the tone in the announcement, although the bank will be careful not to give a hawkish signal to the appreciation of the currency.

Let's now take a look at the NZD/USD technical picture at the H4 time frame. The market is locked in a narrow range between the levels of 0.6882 - 0.6970. In a case of an unexpected rate hike, the price might easily break through the golden trend line around the level of 0.6970 and head higher towards the next technical resistance at the level of 0.7015 and 0.7057. Otherwise, the price should remain in the horizontal zone.