NZD/USD has been declining in 2024, but since last Friday this pair has reversed higher above 0.60, closing yesterday at 0.6070 ahead of the RBNZ meeting which took place early in the morning. Expectations were for the RBNZ to remain on hold, so traders left it at the 200 SMA, waiting for the outcome.

The bearish trend in NZD/USD this year has been the perception of a less accommodative monetary policy stance by the Federal Reserve. With expectations for a rate cut by the Fed in June diminishing, investors have shown increased optimism toward the US dollar, leading to its appreciation against currencies such as the New Zealand dollar (NZD).

NZD/USD Chart Daily – Buyers Pushing the Price Above the 200 SMA

But this pair reversed higher last week despite a strong NFP employment report, while earlier today NZD traders were waiting for the RBNZ to hold its meeting and give some signals when they will start cutting interest rates. The meeting last night aned more on the hawkish side, so buyers got going right away, making a break above the 200 SMA (purple) on the H4 chart.

Reserve Bank of New Zealand March Policy Meeting

• Committee is confident that maintaining the OCR at a restrictive level for a sustained period will return consumer price inflation to within the 1 to 3 percent target range this calendar year

• The New Zealand economy continues to evolve as anticipated by the monetary policy committee
• A restrictive monetary policy stance remains necessary to further reduce capacity pressures and inflation.
• Economic growth in New Zealand remains weak

From the minutes of the meeting:

• Members agreed they remain confident that monetary policy is restricting demand
• Restrictive monetary policy is contributing to an easing in capacity pressures to ensure inflation returns to target
• Further decline in capacity pressure is expected, supporting an ongoing decline in inflation
• Members agreed they remain confident that monetary policy is restricting demand
• Measures of business confidence have declined and firms’ own expectations for activity and investment have weakened
• Near-term business pricing intentions have declined but remain elevated, in part reflecting an uptick in both realised and expected costs.
• Continued strength in net migration, is supporting aggregate consumer spending and rising dwelling costs
• The committee agreed that interest rates need to remain at a restrictive level for a sustained period
• Members agreed that the balance of risks was little changed since the February
• Members agreed that there remains limited tolerance to increase the time to achieve the inflation target while inflation remains outside the target band and while inflation expectations and pricing intentions remain elevated
• Members agreed that persistence of services inflation remains a risk and goods price inflation remains elevated
• Ongoing restrictive monetary policy in an environment of weak global growth could lead to a more rapid decline in inflation than expected

NZD/USD Live Chart