Global macro overview for 09/08/2018
The global investors were not surprised by today’s RBNZ decision on interest rates. As expected, it remained at 1.75%. However, the forecasts for next year have been reduced. By the end of 2019, the base rate is to be at 1.8% (previously expected 1.9%). This means that the rate hike path will be delayed until at least 2020.
What’s more, the published statement shows that rates can be both raised and lowered. It all depends on the condition of the New Zealand economy and external threats. Economic growth has been moderate recently, should accelerate in the second half of the year. The weaker New Zealand Dollar and the strong boom of the global economy should improve export performance.
Low rates and the size of employment promote investments in the business. The unemployment rate should drop significantly. RBNZ is glad that there are signs of higher inflation. Government spending and investment also increased. The situation in construction and households looks good.
Let’s now take a look at the NZD/USD technical picture at the H4 time frame. After the decision was made, the NZD broke out of the horizontal consolidation to the downside and made a new local low at the level of 0.6666. The nearest technical resistance is seen at the level of 0.6685 and only a sustained violation of this level would change the bias from bearish to bullish.