RBNZ implements jumbo cut; Kiwi dollar plummeted
Following the Fed's lead, the RBNZ also took a big step. The RBNZ took the jumbo step of cutting its benchmark interest rate by 50bps, bringing it down from 5.25% to 4.75%. RBNZ stated that New Zealand's economy is now in excess capacity, and low import prices fuel deflation. They insisted that the committee unanimously confirmed that domestic economic activity is decelerating, as business investment and consumer spending are weakening, and employment conditions are persistently deteriorating.
As hopes for the Fed’s additional rate cut diminish, the US dollar is on the rise, while the Kiwi dollar has dropped briefly to 0.6050, matching its lowest since 18th August. NZDUSD advanced to 0.6095 after breaching the ascending channel’s upper bound. If NZDUSD breaches the resistance at 0.6110, the price could gain upward momentum toward 0.6175. Conversely, if NZDUSD fails to hold above the channel’s upper bound and breaks below the support at 0.6050, the price could fall further to 0.5960.
