Forex Signal (Wed April 27 2011, 5:00pm NY Time EST) – NZ Interest Rate

RBNZ (Reserve Bank of New Zealand) will be releasing its interest rate decision today and it is widely expected that Gov. Bollard will decide to continue on the post-quake reconstruction timeline. No rate hikes should be expected until sometime next year.

5:00pm (NY Time) RBNZ Rate Decision Forecast 2.50% Previous 2.50%
ACTION: NZDUSD SELL 2.25%

The Trade Plan
Current forecast from all 17 economists surveyed by Bloomberg agree that RBNZ is likely to leave the official rate at 2.5% during this meeting; however, in the unlikely event that Gov. Bollard surprises the market and hike rates to 2.75% or higher, we should see an immediate strong demand in the NZD which is a great opportunity to spike trade BUY NZD/USD.

However, if RBNZ cuts rate to 2.25% or lower, we should SELL NZD/USD and see it fall back towards former resistance around 0.7800.

For more information on my trading methods, please read:
Henry Liu’s Trading Method

The Market
Economists expect RBNZ to keep interest rates low as inflation continues on the rise. Inflation rose above RBNZ target range but it shouldn’t affect the central banks’ focus of keeping interest rates low.

CPI rose about 1.0% due to a rise in commodity prices, mainly cigarrette and tobacco prices.

Additional Thoughts
NZD is a very slow moving currency and for a news of this caliber, decent retracements are not likely. Considering the expectation for this release, if we do get an “as expected”, market will be focusing on the accompanied statement.

Also 5:00pm market is usually low in liquidity. Unless we get a surprise, it’s probably best to stay out…

Pre-News Considerations
There are no pre-news trade.

Historical Chart and Data for NZ Interest Rate

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