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New Zealand Dollar Dipped Initially then Recovered After the RBNZ Left its Cash Rate Alone

New Zealand Dollar Dipped Initially then Recovered After the RBNZ Left its Cash Rate Alone

Daniel McCarthy, Strategist


New Zealand Dollar, NZD/USD, RBNZ, CPI, NZX50 Index - Talking Points

  • The New Zealand Dollar saw a small volatility uptick after the RBNZ pause
  • The Kiwi Dollar sunk on the news but soon recovered and climber above the open
  • The inflation fire might be smouldering with centrals banks hanging up the hose for now

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n The New Zealand Dollar slid lower after the Reserve Bank of New Zealand (RBNZ) left rates unchanged at 5.50% at its monetary policy committee meeting (MPC) today. It has since rebounded on the prospect of less severe domestic economic conditions going forward.

The RBNZ had previously raised the overnight cash rate (OCR) 12 times since the first lift in October 2021. New Zealand’s S&P/NZX 50 equity index consolidated higher on the news following losses seen at the open.

The Kiwi Dollar had gained some ground going into today’s decision with the US Dollar sliding across the board to start the Asian session.

The initial weakness in the aftermath of the OCR decision was most notable against the Japanese Yen and Australian Dollar.

AUDJPY traded under 86.50 after nudging 89.70 at this time last week. It has recovered back over 87.00.

AUDNZD has rallied a big figure to reach above 1.0830 and is eyeing off the 200-day Simple Moving Average (SMA) that is currently at 1.0834. A convincing break above it might see bullish momentum evolve. Live prices can be found here.

NZ CPI in the first quarter was below expectations at 6.7% and the second quarter reading will be released next Wednesday. The RBNZ have an inflation target of 1 – 3%.

Today’s pause in the hiking cycle may reflect the market perception of many Western central banks whereby once policy settings are seen as tight enough, an extended period of ‘wait and see’ could be in store.

The neighbouring Reserve Bank of Australia refrained from tightening at its meeting last week as did the Federal Reserve at their June Federal Open Market Committee (FOMC) meeting.

The New Zealand interest rate market have moved toward little chance of another rate rise from the RBNZ for the next year and beyond.

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--- Written by Daniel McCarthy, Strategist for

Please contact Daniel via @DanMcCathyFX on Twitter

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.