FxWirePro: NZD/USD dips ahead of RBNZ policy decision

• NZD/USD dipped  on Tuesday as investors looked ahead to the Reserve Bank’s policy decision this week.

• Investors expect the RBNZ to deliver another rate cut on Wednesday, but the size is unclear as the economy continues to face soft growth and hiring despite 250 basis points of easing over the past year.

•New Zealand’s Q2 GDP, released on September 18, showed a 0.9% quarter-on-quarter contraction, far weaker than expected. At the same time, 5.2% unemployment, weak consumer sentiment, and sluggish retail sales continue to drag on the economy.

• The Reserve Bank of New Zealand reduced the OCR by 25 basis points to 3.00% in August, warning that more stimulus would be needed as Q2 growth faltered.

•With only two policy meetings left before Anna Breman assumes the RBNZ governorship on December 1, the central bank cannot afford to wait.

•  Immediate resistance is located at 0.5844(38.2%fib), any close above will push the pair towards 0.5865(SMA 20).

•  Support is seen at 0.05822 (Daily low) and break below could take the pair towards 0.5764(23.6%fib).

 Recommendation: Good to sell around 0.583 with stop loss of 0.5930 and target price of 0.5760