RBNZ Statement Sets Up Further Decline

The Reserve Bank of New Zealand slashed it benchmark interest rate by50 basis points to 2.50% on Thursday.  This was expected, but traderswere surprised by the RBNZ statement calling for rates to move loweruntil 2010.

The Reserve Bank of New Zealand slashed it benchmark interest rate by 50 basis points to 2.50% on Thursday.  This was expected, but traders were surprised by the RBNZ statement calling for rates to move lower until 2010.

This news weakened the NZD USD throughout the day and is likely to have a pretty strong impact on this market over the short-term.  Look for a sizeable downtrend to develop once the last swing bottom at .5485 is violated.

The New Zealand economy is expected to continue to show signs of weakness as export demand continues to decline.  A slow down in the Japanese and Chinese economies is expected to continue to keep the pressure on demand for New Zealand goods.