So, the Reserve Bank of New Zealand raised the rates for the fourth time in a row, to 3.50% despite the weak inflation numbers.
However, this was highly anticipated and seems to be the last hike for the time being. NZD/USD falls already nearly 100 pips.
The pair peeked above 0.87 just before the publication but dropped immediately afterwards all the way to 0.8730. Update: the pair extends its falls towards 0.86 at the time of writing. We certainly have volatility.
The RBNZ repeated that the exchange rate is unsustainable at current levels, but still sees a strong growth rate of 3.7% in 2014. The next decisions are data dependent, and this is now surprise. However, the central bank sees the data in a not too positive manner especially when looking at prices: inflation, wages and even the prices of homes which were an issue not too long ago.
Regarding the currency, it sees a potential for a big fall. These words are similar to those of the Reserve Bank of Australia.
The pair is breaking below the 0.8640 line. 0.86 and 0.8550 follow. For more levels, events and analysis, see the NZDUSD forecast.
Here is how it looks on the chart:
The impact is clearly seen.
