JamesThatcher
Well-known member
What does the data mean to the market?
The Reserve Bank of New Zealand (RBNZ) governor decides where to set the rate after consulting senior bank staff and external advisers. Traders watch interest rate changes closely as short term interest rates are the primary factor in currency valuation.
A higher than expected rate is positive/bullish for the NZD, while a lower than expected rate is negative/bearish for the NZD.
Historic deviations and their outcome
November 13 2019 A shock +0.25 deviation created a fantastic move over 85 pips in the first minute, with price pushing higher for some time after the news release, a great move to bank a healthy amount of pips.
Check out the price action here:
August 7 2019 RBNZ was highly expected to cut the rates on this occasion; however they held the rates, therefore a no change here I classed as a 0.25 deviation which saw a healthy 90 pip move, another great opportunity to bank those pips.
I will use forecasts of:
Interest Rate 0.5
Today's trade plan
Today The Markets are expecting a minimum of a 0.25 basis point (BPS) hike.
Some economists are even predicting a 0.50bps hike.
The Markets have already valued the NZ dollar based on a 0.65bps by the end of 2021
In the last 24 hours, Covid has reared its ugly head again, causing the New Zealand Prime Minister to lock down once more. Thus, leaving The Markets with some very concerning questions.
How long will the new lockdown last?
What effects will it have on economics?
I estimate that the chance of seeing a hike today is much closer to 50/50 than it was.
If we see no change in interest rates, they are kept at 0.25% (effectively a -0.25 deviation). Thus, we can expect a solid move to the downside that I would expect to continue for some time.
If we see a change to the interest rates to 0.50% (Effectively +0.25% deviation), I would expect to see an unprecedented move to the upside on all NZD pairs, which should last some considerable time.
Tradable pairs
AUDNZD
EURNZD
GBPNZD
NZDCHF
NZDJPY
NZDUSD
Hope this helps but please do your own analysis!!
Good luck!!
James Thatcher
Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. Past performance is not indicative of future results. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.
The Reserve Bank of New Zealand (RBNZ) governor decides where to set the rate after consulting senior bank staff and external advisers. Traders watch interest rate changes closely as short term interest rates are the primary factor in currency valuation.
A higher than expected rate is positive/bullish for the NZD, while a lower than expected rate is negative/bearish for the NZD.
Historic deviations and their outcome
November 13 2019 A shock +0.25 deviation created a fantastic move over 85 pips in the first minute, with price pushing higher for some time after the news release, a great move to bank a healthy amount of pips.
Check out the price action here:
NZ RBNZ Interest Rate Decision 2019-11-13 01:00:00.0
NZ RBNZ Interest Rate Decision 2019-11-13 01:00:00.0
calendarapi.galaxysoftwareinc.com
August 7 2019 RBNZ was highly expected to cut the rates on this occasion; however they held the rates, therefore a no change here I classed as a 0.25 deviation which saw a healthy 90 pip move, another great opportunity to bank those pips.
I will use forecasts of:
Interest Rate 0.5
Today's trade plan
Today The Markets are expecting a minimum of a 0.25 basis point (BPS) hike.
Some economists are even predicting a 0.50bps hike.
The Markets have already valued the NZ dollar based on a 0.65bps by the end of 2021
In the last 24 hours, Covid has reared its ugly head again, causing the New Zealand Prime Minister to lock down once more. Thus, leaving The Markets with some very concerning questions.
How long will the new lockdown last?
What effects will it have on economics?
I estimate that the chance of seeing a hike today is much closer to 50/50 than it was.
If we see no change in interest rates, they are kept at 0.25% (effectively a -0.25 deviation). Thus, we can expect a solid move to the downside that I would expect to continue for some time.
If we see a change to the interest rates to 0.50% (Effectively +0.25% deviation), I would expect to see an unprecedented move to the upside on all NZD pairs, which should last some considerable time.
Tradable pairs
AUDNZD
EURNZD
GBPNZD
NZDCHF
NZDJPY
NZDUSD
Hope this helps but please do your own analysis!!
Good luck!!
James Thatcher
Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. Past performance is not indicative of future results. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.