For those of you traders who were able to read my recommendation and open positions just in time, it sure did pay off. The RBNZ decided to increase their interest rate from 7.75% to 8.00% which shot up most NZD pairs. This can be attributed due to the fact that most of the market was in the grey area as to whether or not the RBNZ would in fact increase their rates. Thus, when the rate hike was announced, all NZD pairs went flying across the board.
Even though many economic indicators led to signs of inflation, most of the market believed it would be too soon for the RBNZ to raise rates. In addition, most traders also believed this possible rate hike was already factored into the current price. (Recent trends of high carry trading activity) However, as seen by the graph believe, there was a huge initial spike, followed by a higher price jump overnight due to the Asia market.
As stated in my recommendation, according to Westpac, previous rate hikes pointed to high house prices, rising terms of trade, a robust labor market and strong domestic demand. This criterion was met by the current economic situation resulting in the hike.
The View:
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A possible future RBNZ interest rate graph:
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