NZD/USD edges lower toward 0.65 ahead of RBNZ policy announcements
- GDT Price Index comes in at -2.6% to miss market expectation.
- US Dollar Index looks to snap three-day losing streak.
- RBNZ is expected to cut policy rate 25 basis points to 1.25%.
Following the sharp upsurge to a daily high of 0.6587 during the Asian trading hours, the NZD/USD pair steadily erased its gains as investors are repositioning themselves ahead of the Reserve Bank of New Zealand's (RBNZ) monetary policy meeting. As of writing, the pair was down 0.03% on the day at 0.6524.
Tuesday's data published by Statistics New Zealand revealed that the Unemployment Rate in the second quarter fell to 3.9% from 4.2% to come in better than analysts' estimate of 4.3% to trigger an NZD buying wave. However, concerns over the ongoing US-China trade conflict, which makes it difficult for China-sensitive antipodeans to find demand, didn't allow the currency to preserve its bullish momentum.
In the second half of the day, the bi-weekly Global Dairy Trade auction's Price Index arrived at -2.6% to further weigh on the currency.
Eyes on RBNZ
During the Asian trading hours on Wednesday, the RBNZ is expected to announce a 25 basis point cut to its policy rate. Although this action seems to be already priced in, investors will be scrutinizing the policy statement and look to see if the bank is willing to adopt an aggressive dovish stance. Previewing this event, “The RBNZ said in June that a lower OCR “was likely to be necessary” and that risks were “tilted to the downside”. Data since then has confirmed this,” said ANZ analysts.
“We are forecasting a further OCR cut in November, with the risks rapidly tilting towards another next year should the economy fail to recover its mojo.”
On the other hand, following a sharp drop that lasted for three trading days, the US Dollar Index (DXY) staged a technical correction today, keeping the bearish pressure on the pair intact. The DXY is now looking to snap its losing streak as it adds 0.26% on the day at 97.65.
Technical levels to watch for