NZD/USD slightly lower on RBNZ jawboning, rates unchanged as expected

NZD/USD is trading at 0.7218, up 0.15% on the day, having posted a daily high at 0.7241 and low at 0.7177.

NZD/USD was little changed, dipping slightly on the RBNZ decision that was unchanged at 1.75% as expected. Jawboning is the theme here. 

RBNZ statement:

• Although the statement was policy will remain accommodative for considerable period.
• Policy may need to adjust according.
• Inflation to meet midpoint of target band over the medium term. House price has moderated further and expected to continue as has global growth.
• Lower Kiwi dollar increase tradable inflation and deliver more balanced growth.
• Q2 grew in line with expectations

NZ Politics:

NZ First Party’s Peters: He’ll decide once all votes are counted after Oct 7

NZD/USD got a lift earlier on in the European session, as NZ First's Winston Peters aid the won't decide till October 7th when the count will be known which helped to stabilise the Kiwi ahead of the RBNZ decision today while profit-taking in the cross helped bolster the bid in the major to territory on the 0.72 handle overnight on London's desks. 

US funda factors at play?

• US Durable Goods Orders: Positive momentum heading into year-end - Wells Fargo
• USD: Positioning for tax reform? – Rabobank
• Fed's Bullard: Current level of policy rate is appropriate given current macroeconomic data
• Fed: Odds of a rate hike rising - BBH

Ahead of the RBNZ, we had an Overview of President Trump's tax proposal and Trump, albeit thirty minutes or so late, delivered the GOP's tax framework at a Rally in Indiana as Vice President Pence touched on in Anderson last week. There was no market impact within first 30 minutes of the speech: US Pres. Trump: Going to cut taxes for middle-class, make tax code fairer and simpler

NZD/USD 1-3 month outlook:  

The analysts at Westpac forward outlook is that if the RBNZ remains firmly on hold, as they expect, and the US dollar rises on tighter Fed policy, then NZD/USD could fall as far as 0.70 by year-end. 

NZD/USD levels

A break above 0.7315 opens 0.7370 (the 9th Aug high). Such momentum would solidify a bullish trend back towards 0.7522 and the YTD highs so long as there are closes on the 0.74 handle and beyond the post FOMC kneejerk highs of 0.7434. To the downside, a break below 0.7200 and 0.7180 opens 0.7127 as the June 6th low. 0.7100 is the key psychological level.