Wednesday, July 27, 2011

Reserve Bank of New Zealand Interest Rate Decision - 27 July 2011

RBNZ (Reserve Bank of New Zealand) will be releasing its interest rate decision today and it is widely expected that Gov. Bollard will announce that No rate change today… 

5:00pm (NY Time) RBNZ Rate Decision Forecast 2.50% Previous 2.50%
ACTION: NZDUSD BUY 2.75%

The Trade Plan

Current forecast from economists surveyed by Bloomberg agree that RBNZ is likely to leave the official rate at 2.5% during this meeting; however, in the unlikely event that Gov. Bollard surprises the market and hike rates to 2.75% or higher, we should see an immediate strong demand in the NZD which is a great opportunity to spike trade BUY NZD/USD.

The Market

Recent rise in NZD versus other major currencies, especially against USD and EUR, has provided rooms for RBNZ to keep rates unchanged for the time being. However, with NZD’s relative high demand from recent risk appetite sentiment, speculation that RBNZ will raise interest rate has also risen… The key for today’s news release will be the accompanied statement by Gov. Bollard, which may shed some light on RBNZ’s future monetary policy.

Additional Thoughts
 
At 5:00pm market is usually low in liquidity, therefore unless we get a surprise, it´s probably best to stay out...

Pre-News Considerations

There is no pre-news trading for this release, but pending on the accompanied statement, we could see some weakness in the NZD.

Thanks,