Global macro overview for 21/06/2017:
The Reserve Bank of New Zealand is not expected to change its Official Cash Rate tonight. The current rate should remain at the level of 1.75%. At its last meeting in May, the RBNZ was dovish, tending to dismiss the rise in Q1 inflation as largely temporary, and forecasting only a very gradual return to underlying inflation to its 2.0% target towards the end of its three-year horizon. Moreover, the interest rate hikes were put down until the second half of 2019. The RBNZ monetary policy statement tonight is likely to maintain its dovish policy assessment and the phrase from the last statement "Monetary policy will remain accommodative for a considerable period of time" will likely be reiterated.
Since the May RBNZ meeting, the business conditions and consumer surveys still remain strong, but the GDP was reported to be modest for the second quarter in a row, which means the annual economic growth has slowed to the bottom side of its range for the last 5 years. Inflation expectations, wages, and employment remain unchanged since the last meeting as well and the construction appears to have peaked along with the housing market.
Nevertheless, all the dovish statements and a neutral economic picture did not have a massive dampening impact on the New Zealand dollar as it rebounded to the top of the trading range again in just six weeks. This is why the RBNZ is likely to express some disappointment in their statement with the rebound in the NZD. The general overtone and conclusions should remain very silimar to the last month statement.
Let's now take a look at the NZD/USD technical picture on the daily time frame. The price is trading above 100 and 200 DMA, but still below the long-term golden trendline at the level of 0.7300. The market conditions look overbought, but no bearish divergence is visible yet. The next support is seen at the level of 0.7186 and the next resistance is seen at the level of 0.7318.
