NZD/USD Uptrend Paused for Pending RBNZ Decision About the Cash Rate

New Zealand – Official Cash Rate

On Wednesday, at GMT 10:00 p.m., the Reserve Bank of New Zealand will release the Official Cash Rate, which is the interest rate that banks in New Zealand use to lend funds held at the central bank.

Binary options traders consider the official cash rate to be the most important factor of the valuation of the New Zealand Dollar against other currencies. In fact, most of the other fundamental indicators are considered just to predict future interest rate.

Last month, the RBNZ left the official cash rate at 2.25% and the forecast for this month is that the rate would be reduced to 2.00% in order to boost the slowing New Zealand economy.

United States – Unemployment Claims

On Thursday, at GMT 1:30 p.m., the US Department of Labor will release the unemployment claims figure, which measures the changes in the number of people who claimed for unemployment insurance over the last week.

Binary options investors consider the unemployment claims data to be one of the most important fundamental indicators of the US job market. This is primarily because unemployment and consumer spending has direct correlation and an increasing number of unemployment claims indicate lower consumer spending in the economy, which makes up the bulk of the economic activity in the United States.

Last week, the US unemployment claims figure came out at 267,000 and the forecast for this week is currently set at a slightly higher figure, at 270,000.

Trade Recommendation for the NZD/USD


After being in an uptrend for the first quarter of 2016, the NZD/USD finally broke below the uptrend line at the end of April. However, the bearish retracement was short lived, as the pair resumed the uptrend after finding a strong support near the 0.6725 level last week.

Last Friday, the NZD/USD reached near the psychological resistance level near the 0.6950. Although the price penetrated above this level, the daily bar failed to close above it.

As the RBNZ is expected to reduce the official cash rate this month to 2.00%, it would certainly make add to the bearish pressure. But, it is likely, that information is already priced in by the market. Hence, any bullish move that pushes the price above last week’s high would indicate that the uptrend is going to continue for the time being.

Under the circumstances, it would be recommended that binary options traders consider placing a CALL order for the NZD/USD with their binary options brokers once the price closes above the 0.6950 level.

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