by ForexNewsNow Team on October 26th, 2010

What will RBNZ statement have in store?

New Zealand dollarNEW YORK (Forex News Now) – FX traders will be watching the Reserve Bank of New Zealand this Wednesday evening, 20:00 GMT for its interest rate decision. While the actual rate decision is expected to remain unchanged, it is in the statement that accompanies it that will provide FX traders with something to think about.

New Zealand is a net exporter of commodities. As such, the world’s economic health can be somewhat analyzed from its economic health. Think of New Zealand as the world’s general store. While not only does it export to all of us, it also mirrors the health of the Australian economy.

Recently, the world has gone back and forth as to whether we are heading into a “double dip” recession or not. The emerging markets such as Brazil, India, and China have all been humming right along while the rest of the world is simply treading water. The Kiwis can give us a hint as to how those trends are continuing, or if they are not.

While the most obvious currency to be effected by this announcement is the New Zealand Dollar, don’t forget that the other commodity currencies can reflect the announcement as well, most notably the Australian Dollar. Currently, the Aussie is treading water at the “parity” level against the US Dollar, and as such could be ripe for a fall. Any sign of weakness or concern in the Reserve Bank of New Zealand’s statement could be one catalyst for the Aussie’s fall.

Of course, it is possible that the rate decision could surprise.

Any surprise hike would more than likely support all commodity currencies like the Kiwi, Aussie, Loonie, and the Brazilian Real, as it would show a possibility of worldwide demand picking up. On the other hand, if the RBNZ cuts rates in a surprise move, it would be especially bearish for the Kiwi Dollar as the markets are not expecting this, and it would be the reverse of the above scenario, signaling weakness for all commodity currencies, and would more than likely support the US Dollar for its “safe haven” status.

By ForexNewsNow Team

This is a general account of the ForexNewsNow Team. It is used to published exclusive content carefully crafted by our experts as well as it is used to bring you the most recent industry highlights from our guest contributors that wish to remain anonymous.

More content by ForexNewsNow Team

Comments (0 comment(s))