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February 22, 2021

NZD Weekly Forecast – More Optimism from RBNZ?

 The RBNZ is up this week!

Will the central bank’s sentiments extend the Kiwi’s rally?

I’ve listed down the points you need to know if you’re trading the comdoll in the next few days!

RBNZ’s statement (Feb 24, 1:00 am GMT)

  • The Reserve Bank of New Zealand (RBNZ) announced a new Funding for Lending Program back in November
  • The additional stimulus, combined with optimism over the economy, boosted NZD to its intraday highs after the release
  • Markets see the central bank keeping its policies steady in February
  • Governor Orr and his team will likely express more optimism but still maintain enough dovishness to discourage tightening expectations

Retail sales (Feb 22, 9:45 pm GMT)

  • Continued recovery from lockdowns pushed retail trading up by a whopping 28% in Q3 2020 following a 14.6% drop in Q2
  • Annualized retail sales jumped by 8.3% after a 14.2% decline in Q2
  • NZD popped up to its Asian session highs before seeing retracement in early London session trading
  • Analysts expect retail activity to slow down to 2.5% in Q4 2020
  • Annualized retail sales could also dip from 8.3% to 7.6%

Market risk sentiment

  • Expectations of further optimism from RBNZ can cushion NZD from broader risk-averse themes this week
  • Increased vaccinations, stimulus expectations, and extended rallies in equities and commodities markets can extend NZD’s gains against its counterparts
  • Watch USD’s overall demand, which could get volatile around Fed Governor Powell’s semi-annual testimonies and the U.S. preliminary GDP release

Technical snapshot

  • Bollinger Bands are alerting NZD’s “overbought” levels against EUR and the safe-havens on the daily time frame
  • NZD may soon hit “oversold” conditions against AUD
  • Simple moving averages reflect the Kiwi’s short and long-term bearish trend against the Aussie
  • NZD continues to enjoy short and long-term bullish trends against most of its counterparts
  • Watch out for retracement or reversal opportunities on GBP/NZD
  • NZD has seen the most volatility against the safe-havens and the pound in the last seven days