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February 22, 2022

RBNZ Is Now Doing This

Frank Cabibi

The Regional Bank of New Zealand is set to raise interest rates on the kiwi today. Here are some reasons why the RBNZ is now doing this 25bp rate hike plus pairs you would want to trade.

Combatting Inflation

New Zealand's 1-3% target inflation rate target is still way out of reach as CPI jumped another 6 points q/q. Below is a chart of the New Zealand kiwi's CPI from January 2019 to January 2022.

https://tradingeconomics.com/new-zealand/consumer-price-index-cpi

Although this seems bad for the currency, the rest of the world is in the same boat. NZD and GBP are the only countries that have taken a measurable stance towards combatting inflation so far. So, that 1-3% inflation target range will likely be reached before other countries can.

3 Pairs To Trade

AUDNZD (Short Bias)

RBNZ is now doing this

AUDNZD is looking like one of the pairs to be shorting right now as everyone anticipates the bank rate tonight to change from .75% to 1% in New Zealand. Support lies at the 50 DMA and lower at the 1.05900s. These two levels could serve as take-profit points. This reversion in momentum looks like the start of a down trend on the 1D timeframe.

NZD/JPY (Long Bias)

RBNZ is now doing this

NZDJPY just broke above a long term falling trend line starting in October from last year. A close above this level would suggest further upside and probably a test on the 200 DMA.

NZD/USD (Long Bias)

RBNZ is now doing this

NZD/USD continues to make higher highs and lows on the 1D timeframe. The pair is now up to the 50 DMA for a test. Further resistance sits above around .68600.

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