New Zealand Raises Rates for First Time in Seven Years, More to Come

The 25 basis point rate hike marks the start of a tightening cycle that had been expected to begin in August, but was delayed after an outbreak of the coronavirus Delta variant and a lockdown that is continuing in its biggest city Auckland.

The increase in the cash rate to 0.50% by the Reserve Bank of New Zealand (RBNZ) had been forecast by all 20 economists polled by Reuters.

The New Zealand dollar briefly rose after the announcement but fell back to $0.6930, in line with broader market moves.

“It was pretty much in line with what everyone was picking,” said Jason Wong, senior market strategist at BNZ in Wellington. “We’re on a path towards a series of rate hikes and the market is well priced for that.”

Announcing its decision, the RBNZ said further removal of monetary policy stimulus was expected, with future moves depending on the medium-term outlook for inflation and employment.

The rate hike puts New Zealand ahead of most other developed economy nations as central banks look to wind back emergency-level borrowing costs, although countries including Norway, the Czech Republic and South Korea  have already raised rates.

In neighbouring Australia, the central bank held interest rates at a record low 0.1% for an 11th straight month on Tuesday.

Economists expect the benchmark rate to reach 1.50% by the end of next year and 1.75% by the end of 2023, the Reuters poll showed.


The South Pacific nation has enjoyed a rapid economic recovery since a COVID-driven recession last year, partly because it eliminated coronavirus and reopened its economy before others.

But with its borders still shut, labour and goods shortages are pushing up inflation, as well as contributing to a surging property market, which has been driven by ultra-low interest rates.

“Demand shortfalls are less of an issue than the economy hitting capacity constraints…,” the RBNZ Committee noted in the minutes of the meeting.

The central bank said headline CPI inflation is expected to increase above 4% in the near-term but return towards its 2% midpoint over the medium term.

Recent COVID-19 restrictions have not materially changed the medium-term outlook for inflation and employment, and economic activity will recover quickly when the measures are eased, it added.

But economists said the RBNZ may not race ahead with its hiking cycle in view of the current global uncertainty and the Delta variant outbreak dragging on in Auckland.

“(We) remain of the view that further rate hikes will be in 25 basis point increments rather than 50 basis point moves,” said Citibank economist Josh Williamson.

New Zealand abandoned its strategy of eliminating COVID-19 this week, with the government saying it will have to live with the virus and step up vaccination rates to control it.

In August, a central bank official confirmed it had also considered a 50-basis-point move that month, before taking a rate hike off the table altogether due to the lockdown.

For a look at all of today’s economic events, check out our economic calendar.

(Additional reporting by Tom Westbrook in Singapore; Editing by Richard Pullin)

New Zealand Central Bank Ends Bond Purchases, Paving Way for Possible Rate Hikes

The Reserve Bank of New Zealand (RBNZ) kept its official cash rate at 0.25% but cut short a NZ$100 billion ($70 billion) bond buying programme, prompting local banks to bring forward calls for a rate rise to as early as August, which would put New Zealand at the forefront of countries to raise interest rates.

“The RBNZ has absolutely done enough hand-waving today to tick the ‘market-prep’ box for an August hike, with CPI and labour market data set to do the rest,” said Sharon Zollner, Chief Economist at ANZ Bank.

The move comes amid nagging inflation worries globally, with U.S. inflation data rising by the most in 13 years in June, adding to uncertainty about whether such inflationary pressures are transitory.

New Zealand’s pandemic-free economy has been growing on the back of a housing boom and strong retail spending, raising concerns that it may get overheated pushing inflation above the bank’s target and squeeze the labour market.

First quarter GDP swept past forecasts, rising 1.6%. A survey last week showed the business outlook was now better than pre-COVID levels, and hiring constraints and inflationary pressures were starting to bite.

The RBNZ noted that in the absence of further economic shocks, consumer price inflation pressure is expected to build over time due to rising domestic capacity pressures and growing labour shortages.

“Members agreed that the major downside risks of deflation and high unemployment have receded,” the RBNZ said in minutes of the meeting.

“The (Monetary Policy) Committee agreed that a ‘least regrets’ policy now implied that the significant level of monetary support in place since mid-2020 could be reduced sooner.”


A rate hike this year would make New Zealand the first developed economy to kick off policy tightening. The Reserve Bank of Australia said earlier this month that it did not expect a rate rise before 2024.

The New Zealand dollar rose 1.1% after the announcement to $0.7017. Yields on two-year bonds surged 9 basis points to its high for this year at 1.668%.

“The RBNZ has clearly changed tack to decide that the time for reducing monetary stimulus is very near. The risk of inflation and employment undershooting the objectives has switched to the risk of overshooting should the current level of stimulus remain in place,” said Nick Tuffley, Chief Economist at ASB Bank.

The RBNZ slashed its interest rate to record lows in March last year and pumped billions of dollars in stimulus as the COVID-19 pandemic raged through the country and the globe.

New Zealand, however, managed to contain the spread of the virus, with the last community case of COVID-19 reported in February, allowing the economy to bounce back faster than most others.

At its meeting in May, the RBNZ had hinted at a hike in September 2022.

For a look at all of today’s economic events, check out our economic calendar.

($1 = 1.4253 New Zealand dollars)

(Reporting by Praveen Menon; Editing by Richard Pullin)

Indices In a Correction Mode but Still Bullish in The Long-Term


American indices take a small break after the buying marathon which started the previous week.

DAX bounces from the 38,2% Fibo and the lower line of the flag. That is bullish but the false breakout from Monday can be a little bit worrying.

Gold breaks the upper line of the pennant and climbs higher to test the upper line of the channel up formation. The life of a gold bull seems ok at the moment.

The same with oil bulls. Today, we do have a small correction but the main sentiment is definitely positive.

The EURUSD extends loses after the double top formation.

The AUDCHF is still above a major support but it doesn’t look like a bounce, more like a correction and preparation for another leg down.

The NZDCAD climbs higher after the false bearish breakout.

The EURCAD makes a double top formation on the 38,2% Fibonacci. That is one of the best price action setups there is. A bearish setup of course

The GBPJPY is waiting for a breakout from the symmetric triangle pattern. That can turn into an awesome trade pretty soon.

For a look at all of today’s economic events, check out our economic calendar.

Indices Continue the Rise From the Last Week


Indices start this week on the front foot. The global bounce from the end of the last week seems secure.

Gold waiting for a breakout inside of the pennant formation.

Brent Oil continuing the bounce from a crucial horizontal support on the 65 USD/oz.

The EURUSD pair cannot decide which direction it is heading, having strong bullish and bearish days, one after another.

The AUDCHF pair is testing 38,2% Fibonacci. First buyers are there!

The NZDCAD pair is coming back above the lower line of the descending triangle pattern. That is potentially a start of a false breakout pattern and a legitimate buy signal.

The GBPJPY pair tests the neckline of a nice Head and Shoulders formation.

For a look at all of today’s economic events, check out our economic calendar.

Weaker Dollar helps Gold to Stay Above Crucial Support

Gold is testing the ultimate long-term support again. This time, we do have a chance for a double bottom formation.

Silver is in a slightly worse situation as we are still quite far from crucial supports and a lot can happen in the meantime.

Indices are climbing higher like there is no tomorrow.

The EURUSD with a bounce from the 38,2% Fibonacci. That can be the end of USD strength.

THE USDCHF is possibly starting a bearish correction as the price is currently drawing the shooting star on a daily chart.

The GBPUSD is reversing, which is denying a quite sweet sell signal from yesterday.

The NZDCAD breaks the lower line of the flag and aims lower.

The EURPLN stays above the upper line of the triangle proving that this pattern is super effective.

For a look at all of today’s economic events, check out our economic calendar.

US Dollar Gains Strength

Gold still holds strong but chances for a second test of 38,2% are increasing.

Silver inside of the symmetric triangle pattern, getting ready for a breakout.

Nasdaq dangerously comes back below the neckline of the giant inverse head and shoulders.

DAX inside of the ascending triangle pattern. Bullish breakout slightly more possible.

EURUSD drops after bounce of the 1.1915.

AUDUSD breaks the lower line of the symmetric triangle.

NZDUSD with a very similar situation as the Australian peer.

USDCHF breaks the upper line of the flag, looking bullish.

NZDCAD with an ultimate bearish setup. Few negative factors at once look very pessimistic.

For a look at all of today’s economic events, check out our economic calendar.

FX Weekly March 7

Currency markets this week remain in pivotal positions however added to the week is NZD/USD at 0.7139, 

GBP/CAD 1.7484

AUD/USD 0.7652

USD/CAD 1.2771,

CHF/JPY 116.65

AUD/NZD 1.0765

AUD/CAD 0.9768 and 

NZD/CAD 0.9113

Ranges are wide this week and markets are easily capable to handle the big moves expected. Watch in particular EUR/NZD and EUR/AUD then GBP/USD. 

AUD/USD and NZD/USD topside pairs NZD/CAD and AUD/CAD both broke lower and signifies its a matter of time before AUD/USD and NZD/USD break and trade much lower. Bottom pairs AUD/CHF and NZD/CHF are both overbought and assists to further downside to AUD/USD and NZD/USD. 

GBP/AUD last week’s vital points were located from 1.8130 to 1.7885. This week 1.8130 to 1.7905. GBP/AUD broke 1.7885 and traded 80 pips lower. GBP/AUD correlates to GBP/USD at – 64% and caution is warranted to trade GBP/AUD.

GBP/NZD last week reported ranges from 1.9318 to 1.9176. This week 1.9318 to 1.9188. GBP/NZD last week first  broke 1.9176 to trade 82 pips to 1.9094. GBP/NZD then traded above 1.9176 to achieve 1.9415 highs and closed at 1.9290 vs last week’s close  at 1.9244. GBP/NZD correlation to GBP/USD run -43% and caution to this week’s trade. 

EUR/USD and all EUR pairs are deeply oversold and matches to richter scale overbought to USD/JPY and USD/CHF. Moves lower to USD/JPY and USD/CHF are corrective unless 105.70 and 0.9064 breaks lower. EUR/USD higher is corrective unless 1.2020 and 1.2034  trades higher. Weeks ago was reported EUR/USD targets at 1.1800’s and 1.1700’s. 

JPY cross pairs represent the best market moves for most pip gains beginning with GBP/JPY as all JPY cross pairs are overbought and current prices are miles to high. 

Last post was shown GBP/JPY true moving averages and the 20 day is located at 148.38 then the 50 day at 145.26. The 20 day average matches the 10 year average at 148.36 and off by 2 pips. A break at 148.00’s then GBP/JPY larger range becomes 148.38 to 142.30. 

Watch EUR/CAD higher this week, EUR/GBP oversold and GBP/USD overbought. 

Next 2 and 10 year yields, levels, ranges and targets. Inflation as a 3 month interest rate and its relationship to the 2 year yield. 

Bears Dominate the Indices and Metals


Gold is slowly but surely aiming for the 1680 USD/oz support level.

Silver is aiming to break the 26 USD/oz support level.

The NASDAQ is in a head and shoulders pattern.

The DAX is in a shooting star pattern on the daily chart, while flirting with all-time highs.

The AUDUSD is defending its major, long-term uptrend line.

The NZDCAD is in a negative sentiment after a false bullish breakout.

The CHFJPY is breaking a crucial, long-term horizontal support at 116.2.

For a look at all of today’s economic events, check out our economic calendar.

Sellers on Gold Have Appetite for More

Buyers on Gold struggle to hold above the crucial support on 1765 USD/oz. If broken, the target is on the 1680 USD/oz and in theory, this level looks extremely solid.

Nasdaq finishes the head and shoulders pattern and is ready to break the neckline.

DAX is still fighting on pre-Covid February highs.

EURUSD with a sharp reversal but still with a positive sentiment.

NZDCAD with a potential very dangerous false bullish breakout.

EURCHF corrects the recent surge.

Two safe haven currencies, CHFJPY test the 117.7 again. As long, as we stay below, the sentiment is negative.

For a look at all of today’s economic events, check out our economic calendar.

Commodities Rise as Dollar Falls

Gold bounces off the 1765 USD/oz support.

Silver also goes higher after bouncing off an important dynamic support.

The Nasdaq tests the mid-term up trendline.

The DAX is in a daily hammer, so far…

The EURUSD is a few steps from a major buy signal.

The USDCHF bounces off a dynamic and horizontal support.

The NZDCAD is currently attacking a major horizontal resistance, getting ready for a long-term buy signal.

The USDCAD price is in a inverse head and shoulders pattern for the second time in 5 days.

For a look at all of today’s economic events, check out our economic calendar.

Weekly Round Up – February 21st, 2021

AUD/USD broke its long standing and much written line at 0.7821 and traded 57 pips to 0.7877. Above 0.7821, AUD/USD ranges between 0.7821 to the 10 year average at 0.8305 or 484 pips. Below 0.7821, AUD/USD trades 0.7821 to 0.7308 or 513 pips. Below 0.7821 exists 0.7605.

DXY last week maintained its 148 pip range between 89.95 to 91.43. Above 91.43 next targets 92.78 in a 135 pip range.

GBP as written in the last post maintains deep overbought status across all GBP pairs except GBP/NZD. Watch 1.9136 this week for best moves.

EUR/USD opens in fairly perfect neutrality however ranges continue to compress. Problem pair EUR/JPY and all JPY cross pairs maintain deeply overbought status for week 4. EUR/CAD, EUR/NZD and EUR/AUD open the week massive oversold. EUR/CAD and EUR/AUD will provide the best moves.

Stand clear EUR/CHF as AUD/CHF and NZD/CHF will provide better movements.

NZD/USD 0.7267 then 0.7356 Vs 0.7267 and 0.7990. NZD/CAD is overbought while NZD/JPY heading into week 4 maintains richter scale overbought status.

Overall, NZD/USD traded 200 pips from 0.7100’s to 0.7300’s for the past 2 months and provided support to GBP and AUD to allow both to move higher. Explains the divergence seen in EUR/NZD Vs GBP/NZD this week.

USD/JPY watch 104.97 and USD/CAD 1.2587 Vs 1.2826.



Indices Ready to Set New All-Time Highs

Gold bouncing of 38,2% Fibonacci and creating a head and shoulders pattern. That can be negative.

Brent is continuing the buying fiesta.

Nasdaq is ready to set new ATH.

DAX breaks the upper line of the wedge and aims for the new highs.

The EURUSD escapes from the wedge too and also climbs higher.

The AUDUSD escapes from the flag and the tests the broken resistance as a support. Definitely a bullish attitude.

The USDCHF drops below crucial horizontal and dynamic supports. This is not good for the demand.

The NZDCAD still below crucial long-term horizontal resistance. Interesting occasion for short.

The NZDUSD with a very similar setup to AUDUSD but in this case, instead of a flag, we do have a pennant.

For a look at all of today’s economic events, check out our economic calendar.

Gold Disappoints While Oil and Indices Climb Higher and Higher

Gold dropped and is aiming at the 1765 USD/oz level.

Oil, on the other hand, seems to be aiming for the stars.

The DAX is in a bullish engulfing pattern on the weekly chart that looks great for buyers.

The EURUSD has dropped significantly before bouncing. Most likely the price will test the 1.206 resistance level.

The AUDUSD is aiming higher after an inverse head and shoulders pattern.

The USDCHF met a strong horizontal resistance after a nice upswing caused by the iH&S formation.

The NZDCAD is still below the crucial resistance level of 0.923.

The USDCAD in a pennant, waiting for a breakout.

The NZDUSD is in the same situation. The price will potentially see a big move ahead.

The EURGBP has dropped like a rock after the price created a massive head and shoulders pattern.

For a look at all of today’s economic events, check out our economic calendar.

American Dollar Close to a Major Buy Signal

GBPUSD reaches and bounces from a crucial horizontal resistance.

USDCHF creates a right shoulder of the iH&S pattern.

NZDUSD, on the other hand, creates a right shoulder of the H&S pattern; we are close to the neckline.

NZDCAD is in an even better spot as here the price is breaking the neckline as we speak.

CADCHF locked inside of a big symmetric triangle. Waiting for the breakout.

For a look at all of today’s economic events, check out our economic calendar.

Stocks Erase Tuesday Loses, On The Way Towards New Highs Again.

Stocks erased Tuesday’s loses and are heading significantly higher.

EURUSD fell back below crucial support and are now testing the lower line of the flag.

EURAUD still locked inside of the long-term range.

AUDNZD breaks the neckline of the inverse head and shoulders pattern and the upper line of the flag.

USDJPY creates a small pennant after breaking major long-term dynamic resistance.

EURNZD with the head and shoulders pattern but the first attack on the neckline was unsuccessful.

NZDCAD with a head and shoulders pattern but the first attack on the neckline was unsuccessful too.

For a look at all of today’s economic events, check out our economic calendar.

Buyers Will Have to Defend the Recent Gains

The first Monday in July started off positively with indices heading higher. This could have been triggered by traders’ good mood following the US Independence Day, or optimism over the COVID pandemic, perhaps it’s the freshly printed US dollars from the Federal Reserve, flooding the market. Instead of focusing on what has happened, let’s focus on what will probably happen next.

Let’s start with the SP500, on Monday it broke a crucial mid-term resistance on the 3155 point. This resistance has held its own since mid-June, buyers tried to break it a few times but failed, which makes it a significant level. This area was broken during the Asian session and the price remained above it during the European and American hours. The SP500 tested the broken resistance as a close support during the beginning of the European session on Tuesday. It’s crucial to hold the price above this support level to get a mid-term buy signal. Otherwise, we may experience a false bullish breakout pattern, which may be pretty unpleasant for demand.

Moving on the NZDUSD, the price of the pair is currently correcting the bullish movement that happened after the defense of the 0.639 support level and the breakout of the dynamic down trendline. Here, the price is also testing the broken horizontal resistance as a close support, which can work out for sellers.

Meanwhile the NZDCAD’s price is bouncing from the major down trendline on the weekly chart. As long as the price stays below the trendline, sentiment is negative. More will be revealed on Friday when we can view the shape of the weekly candle. Anything with a bearish body, will be considered a sell signal.

For a look at all of today’s economic events, check out our economic calendar.

What is happening on the AUD and NZD?

Unemployment rate rose, which is bad but the Unemployment change was higher than expected. That was an information, which could have been perceived as a positive one. Despite that, AUD dropped, why? The reason for that was that this data was only partially good as most of those gains were coming from the part-time jobs. Those numbers increased the chances for a further rate cut in Australia, which is negatively affecting local currency.

First, we will show You the AUDUSD, where the bearish flag is a fact. The price broke its lower line and went down. The latest development here is the price successfully testing 0.694 as a resistance. That is a confirmation of a negative sentiment, that we mentioned yesterday.

Negative sentiment can be also seen on the AUDJPY, where instead of the double bottom formation and an upswing, the price created the pennant resulting in a downswing. Sell signal is ON.

Few words about the NZDCAD, which was on our radar for a long time. After heave drop, the correction time came and the price created the flag formation (red lines). This kind of patter, as you know, should bring us a further decline but the sell signal will be created, when the price will break its lower line.

This article is written by Tomasz Wisniewski, a senior analyst at Alpari Research & Analysis

Three setups with a Bullish correction – Gold, Oil and NZDCAD

FX is pretty quiet today too but we have few setups that you may find interesting.

First one is Gold, which most recently found and confirmed the most important horizontal support – 1270 USD/oz. As long as we stay above this line, the sentiment seems positive and we are still playing the correction scenario, not the reversal one. The real buy signal will be triggered, when the price will break two black dynamic resistances.

Oil – the second most popular commodity among FX traders is in a slightly worse situation than Gold. Here, we also have a price bouncing from a support but the thing is that the bearish momentum looks pretty strong here. Last week was catastrophic for Crude and it seems that this is not the end of bullish troubles.

Now something more exotic but very technical – NZDCAD. The sell signal from march was a proper one. We had a bearish engulfing pattern together with a false breakout. The price dropped creating a legitimate downtrend. Most recently, we do have a bullish correction, which is aiming for the long-term horizontal resistance. Chances that we will get there are pretty high, especially that in the same time, this is a 38,2% Fibonacci. Sentiment is still negative.

This article is written by Tomasz Wisniewski, a senior analyst at Alpari Research & Analysis

Is Gold Like USDRUB?

Usually, when AUD jumps, we have a similar movement on the NZD. This time is a bit different. NZD is not following this path. Actually, on NZDCAD we do see a very good, long-term sell signal.

NZDCAD is one of my favorite pairs in the group of trading occasions for weeks or even months. Here, we are going down driven by the bearish engulfing on the weekly chart along with the double top formation and the false breakout above the down trendline. About the double top formation…most recently, we broke the neckline of this pattern and tested that as the closest resistance. That takes away all the arguments from the bulls and opens us a way towards the lows from October. That gives us an opportunity for 550 pips trade. Sweet, isn’t it?

Next one is Gold, which is using this risk-off mode on the market that we see right now. The price is making a double bottom formation at the end of a wedge pattern. That can be a good start for an upswing. The buy signal will be triggered when the price will close above the upper red line.

A very similar setup can be found on the USDRUB. Actually here, you have an example, what can or should happen to gold in the future. USDRUB already broke the upper line of the wedge, using the double bottom formation. The buy signal is ON and we should see a further rise.

This article is written by Tomasz Wisniewski, a senior analyst at Alpari Research & Analysis

Correction Time

On most of the assets that does not change the long-term situation but on some, it may be a start of a bigger reversal, which may be continued for the next few weeks.

As an example of the second group I give You Gold. The price created the double bottom formation and is now trying to break the neckline of this pattern. What is great here is that this neckline is in the same time the neckline of the much bigger head and shoulders formation and is in the same area as the lower line of the symmetric triangle. Those two were previously strong supports and now, play role of a crucial resistance. Price closing a week above the blue and black lines will give us a proper buy signal.

USDCHF stopped the surge and it seems that is ready for a bearish correction. The aim for the correction is on the green and black line – horizontal and dynamic support respectively. Sentiment here is still ultra-positive.

Last instrument is the NZDCAD, where the price is creating a strong bullish weekly candle – hammer. This candle is being drawn on the neckline of the double top formation, which my stop the bearish plan, at least for a while. The sentiment is still negative but the major sell signal will be triggered, when the price will break the lows of the hammer candle. As long as we are above, the bullish correction is the most favorable scenario.

This article is written by Tomasz Wisniewski, a senior analyst at Alpari Research & Analysis