With ALL surveyed economists expecting the official cash rate out of New Zealand to be cut at Thursday’s meeting, we take a look at where price currently sits, compare it to what happened last time a rate cut was expected and then go through some trading scenarios.
“NZD Official Cash Rate (2.75% expected and 3.00% previously)”
With a 25 basis point cut taking the official cash rate to 2.75%, the question now becomes how much of the impending cut is already priced in?
I have drawn a box around the end of the week heading into the cut’s price action, highlighting the steep drop as the market jumps on board expecting the cut.
As you can then see from the arrows, price opens the week on its lows and rallies into the decision, culminating in a news spike to the upside on a cut.
With a cut all but priced in once again, could we see similar NZD/USD price action this week? Watch on your own Vantage FX MT4 charts by downloading a demo here.
Dane Williams – @VantageFX
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