Trading the RBNZ Rate Statement with NZD/USD

As indicated in my latest Comdoll Trading Kit, the RBNZ rate decision is one of the main events for the comdolls this week. Word through the forex grapevine is that the New Zealand central bank is gearing up for yet another interest rate hike, but I’m inclined to think that we’ll see a disappointment this time.

In their previous rate statements, the RBNZ decided to tighten monetary policy as economic data kept showing strong improvements. In the past weeks though, New Zealand has seen a massive decline in dairy exports and milk prices, leading Fonterra to revise their forecasts lower. With New Zealand relying mostly on its export industry, the projected slowdown might take a huge toll on overall growth prospects.

With that, the RBNZ could decide to keep monetary policy unchanged for the time being. This might lead to a sudden Kiwi selloff against the U.S. dollar, which has been supported by risk sentiment and relatively upbeat U.S. data.

NZD/USD 4-hour Forex Chart

NZD/USD 4-hour Forex Chart

I decided to take a page off Huck’s book and throw in a couple of moving averages on my charts. On NZD/USD’s 4-hour time frame, the 50% Fib lines up with the broken support level and the 100 SMA, making it a potential sell area. I plan on shorting around the .8550 minor psychological level with a stop above the 61.8% Fib and 200 SMA.

Stochastic is already indicating oversold conditions, which suggests that Kiwi bulls could return and push the pair a little higher in the near term, probably just enough to reach my desired entry area. Do you think I should just short at market or be more patient and wait for another test of .8550?

Happy time

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  • monser33

    Short it