NZD: The Reserve Bank today reduced the Official Cash Rate (OCR) by 25 basis points to 3.25 percent. The Reserve Bank reduced the Official Cash Rate (OCR) by 25 basis points to 3.25 percent. The exchange rate has declined from its recent peak in April, but remains overvalued. A further significant downward adjustment is justified. We expect further easing may be appropriate. This will depend on the emerging data.
After the RBNZ unexpected rate cut, the cross spiked 400pips at the early Thursday's session. Readers can remember we initiated buying at 1.4560 in April 2015. The cross is trading on a verge of a breakout and major resistance levels. In the weekly chart, the pair managed to breach the 22-month descending trendline. Today, it has breached above 200Wsma and trading above. The 50Msma is found at 1.6110 and 200Wema is found at 1.6240. This cross favors to buy on dips. In case bulls manage to close above 1.6110 by the end of the week, bulls will aim at 1.6200 and 1.6230 next week. It can extend towards 1.6350/1.6400.
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