There is no sign that the RBNZ, which will publish its monetary policy report today, will need to tighten its monetary policy soon. Prospects for economic growth remain good, but inflation still needs no reaction from the bank.Unemployment has been falling gradually for more than five years, from close to 7.0% in 2012, a sign that the economy may be running at close to full speed, but the recent strengthening of the job market, which has firms reporting more difficulty in finding skilled labour than at any time since 2005, has come with little wage growth or inflation. The CPI index slowed in January to 1.6% which is still below the RBNZ inflationary target. Moreover, economist doubt that inflation would accelerate in the fashion the Reserve Bank expects, even if economic growth did accelerate. The reason might be in a surge in a self-employment and casual employment, together with a technology advance, so no real reason for RBNZ to hike this month.
The Reserve Bank of New Zealand interest rate decision will be published on Wednesday, February 8 at 08:00 pm GMT. The market participants expect the interest rate to stay on the spot at 1.76%. Together with the decision, RBNZ Monetary Statement will be published and Press Conference held later on.
Let's now take a look at the NZD/USD technical picture at the H4 time frame. After the top at the level of 0.7435 was established, the market fell out of the channel and went down to test the technical support at the level of 0.7275. Then it tried to rally, but the technical resistance at the level of 0.7343 was too strong for the bulls, so the price moved lower again. Currently, the market trades inside of the horizontal zone between the levels of 0.7254 - 0.7343 in oversold market condition awaiting the RBNZ interest rate decision.
