RBNZ: MNI RBNZ Preview - April 2024: Too Soon To Ease
- The RBNZ is firmly on hold and there appears to be a high bar for it to shift rates in either direction for now. When it meets on April 10, we expect it to leave rates again at 5.5% where they have been since May last year.
- The April meeting will not include a forecast update or a press conference. We expect the statement to be in line with February’s softer tone with a moderate tightening bias retained, as the RBNZ has “limited tolerance to increase the time to the target mid-point” and it has an asymmetric reaction function with the consequences of easing too soon outweighing those of a delay.
- Governor Orr said in February that policy needs to remain “restrictive” to return inflation to target but the MPC is now more confident this will occur as expected. However, it is still too soon to discuss rate cuts, which it didn’t do at the last meeting, and the OCR path is steady through 2024. If the economy continues to develop as the central bank expects then rate cuts are unlikely until early 2025.
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AUSSIE 10-YEAR TECHS: (H4) Support Stays Intact For Now
- RES 3: 96.207 - 61.8% of the Mar 14 - Nov 1 ‘23 bear leg
- RES 2: 96.160 - High Jul 20
- RES 1: 96.110 - High Dec 28 and the bull trigger
- PRICE: 96.013 @ 16:01 GMT Mar 08
- SUP 1: 95.650 - Low Jan 19
- SUP 2: 95.390/275 - Low Nov 27 / 14
- SUP 3: 94.965 - Low Oct 31
Aussie 10yr futures are recovering well, but are yet to trouble resistance. Markets need to build on recent gains through the mid-Feb highs of 95.870 to build a base ahead of 96.070, the Feb 2 high and next key resistance. 96.110, Dec 28 high, remains the bull trigger. Key support lies below at 95.390 as well as 95.275. Weakness through here would be bearish. First support to watch lies at 95.650, the Jan 19 low.
USDCAD TECHS: Pierces Support
- RES 4: 1.3729 76.4% retracement of the Nov 1 - Dec 27 bear leg
- RES 3: 1.3661 High Nov 27
- RES 2: 1.3623 61.8% retracement of the Nov 1 - Dec 27 bear leg
- RES 1: 1.3516/3606 20-day EMA / High Feb 28 and the bull trigger
- PRICE: 1.3465 @ 16:14 GMT Mar 8
- SUP 1: 1.3420 Low Mar 8
- SUP 2: 1.3359 Low Jan 31 and key S/T support
- SUP 3: 1.3343 Low Jan 12
- SUP 4: 1.3288 Low Jan 5
USDCAD traded sharply lower Friday as the pair extended the short-term reversal from 1.3606, the Feb 28 high. Key support lies at 1.3359, the Jan 31 low and a break of this level would be bearish. Initial firm support to watch lies at 1.3441, the Feb 22 low. It has been tested. A clear breach would open 1.3359. On the upside, the bull trigger is at 1.3606, where a break is required to reinstate a bullish theme.
AUDUSD TECHS: Maintains A Firmer Tone
- RES 4: 0.6748 High Jan 5
- RES 3: 0.6729 High Jan 12
- RES 2: 0.6708 61.8% retracement of the Dec 28 - Feb 13 bear cycle
- RES 1: 0.6668 High Mar 8
- PRICE: 0.6629 @ 16:12 GMT Mar 8
- SUP 1: 0.6563 50-day EMA
- SUP 2: 0.6478/6443 Low Mar 5 / Low Feb 13 and the bear trigger
- SUP 3: 0.6412 76.4% Fibonacci retracement for Oct - Dec upleg
- SUP 4: 0.6360 Low Nov 14
AUDUSD traded sharply higher Friday and remains firm. The recovery across the week threatens a recent bearish theme and price has cleared the 50-day EMA. Resistance at 0.6595, the Feb 22 high, has also been cleared and this strengthens a bullish theme, signalling scope for a continuation higher. Potential is seen for a climb towards 0.6708, a Fibonacci retracement. Initial key support is at 0.6478, the Mar 5 low.
