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AUD / NZD: RBNZ decision on rates_10/03/2016

Technical analysis and trading recommendations -

Amid fears of a further deterioration of the global economic outlook, especially in growth in China, and inflation expectations in most of New Zealand, the Central Bank of New Zealand yesterday unexpectedly cut interest rates by 0.25% to 2.25%.

According to the bank, taking into account the fall in world commodity prices and the New Zealand exports, the decline of the national currency value "is justified" because trade-weighted exchange rate of the New Zealand dollar at 4% above the December forecast.
The New Zealand dollar has fallen off yesterday on the entire market, and the pair AUD / NZD rose more than 220 points. Volatility in the moment of the news of almost 200 points.

On the other hand RB Australia since May 2015 keeps interest rate unchanged at 2%, while other central banks gradually reduce the rate of its national currency.
According to some estimates, the Australian dollar is overvalued by 10%. And, according to the board of the RBA member John Edwards, a fair exchange rate is close to the level of 0.6500.

Sharp appreciation of the Australian dollar could be a catalyst for reducing the RBA interest rate. Near the RBA meeting on the issue is scheduled for 5 April.
Given the sharp rise in the pair AUD / NZD in recent days and the achievement of key resistance levels, and also arisen strong imbalance spreads priced in Australian and New Zealand dollar against the US dollar, it is possible to roll back the price levels achieved in the direction of the global downward trend.

Thursday, 10 Mar, 2016 / 12:28

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