RBNZ Tariff Ruling
The central bank pair will have their interest rate meetings this week, both on Wednesday July 13th.
The first is the Reserve Bank of New Zealand (RBNZ) which is expected to raise rates by 50 basis points (bps) to 2.5% to return to levels not seen since 2016.
The RBNZ was among the first central banks to start raising rates until October last year – the bank’s official exchange rate was 0.25%. This rate hike expected this week will be the sixth in a row.
A quick update on where we are in terms of the New Zealand dollar. It is the New Zealand dollar against the US dollar. It is very similar against the Australian dollar. So you will trade that the same way.
If you think there will be a more aggressive stance from New Zealand’s central bank, then obviously you’d like to see it break that support line at 6124. If it’s a little less hawkish in its rhetoric, may Maybe we could see that support line at 6124 being held.
BoC on rates
Later today, Wednesday at 3:00 p.m. UK time to be precise, the Bank of Canada (BoC) will release its interest rate decision.
Now, it started its rising process a bit later, but ranks among the highest rates of the world’s major economies. Economists forecast a 75 basis point rate hike this week from the BoC, which would take the bank’s overnight rate to 2.5%.
Until January of this year, the Bank of Canada rate was 0.25%, so we saw 200 basis points in six months, which has been the way the Canadian central bank has chosen to act with interest rates.
Let’s take a look at what happened to USD/CAD.
We have seen this type of triple top pattern forming here, capping at 13078. During today’s session we have the US Dollar rising against the Canadian Dollar, but so is the RBNZ – if you have an aggressive hawkish Canadian central bank, could we see that line at 13078 defended and continue lower.
We’ll have to see what happens with those two interest rate decisions on Wednesday of this week.