We realize that today’s FOMC Meeting may be a little more important than tonight’s (tomorrow Morning) Reserve Bank of New Zealand Interest Rate Meeting. Nonetheless, with 99% of Forex traders, analysts, etc focusing on the FOMC Meeting, we wanted to highlight a potential opportunity in the NZDUSD.
The Kiwi and Aussie were two of the big winners at the start of 2012, with the NZDUSD and AUDUSD gaining 8.2% and 5.2% respectively. However, after February’s great US Employment figures each pair traded lower as a result. The selling pressure has especially hit the AUDUSD which continues to trade lower and is around flat for the year following surpringly Dovish comments from the Reserve Bank of Australia.
During this time though, the RBNZ has held its rates steady, with its statements taking a “Hawkish” tone.
Nonetheless, the RBNZ has still held back from pulling the trigger on a rate hike. Currently, New Zealand fundamentals have been coming out lower than expected with last week’s CPI for example, dropping to 0.5%. Nonetheless, the NZDUSD is still holding onto around a 4.0% gain for 2012. As such, the NZDUSD could be vulnerable to selling pressure if ithe RBNZ reverses its course and turns cautious. On the other hand, if the central bank continues to issue forecasts of future rate hikes, the Kiwi could return to outperforming the overall market.
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