RBNZ may increase pace of rate cuts – OCBC

“The RBNZ policy decision is due at 9am (SGT) tomorrow. The New Zealand dollar (NZD) was last at 0.6118 levels, notes Christopher Wong, FX strategist at OCBC.

The RBNZ will accelerate the pace of rate cuts to 50bp

“Markets widely expect the RBNZ to accelerate the pace of rate cuts to 50bps each at the other 2 MPCs for the year and a further cumulative 100bps cut for the first half of 2025. NZIER’s quarterly business sentiment survey says only 3% of firms were able to raise prices to pass on costs, down from 23% in the previous quarter.”

“The same report also indicated that significant proportions of firms now report that it is easy to find skilled and unskilled labor. With prices already expected and the Kiwi correcting >2% in the past week, the NZD risks being a ‘sell on rumour, buy on fact’ policy decision unless the RBNZ doubles down on dovish rhetoric. “

Bearish momentum on the daily chart is intact, while the RSI dip is showing signs of a reversal from near oversold conditions. Support comes at 0.61 (200 DMA), 0.6070 levels. Resistance at 0.6160 (50 DMA), 0.6620 (21 DMA).