The RBNZ's Surprising Hawkish Move
05 April 2023
Tuesday's moves were very interesting and brought us several promising trading opportunities. Let’s start with indices, which initially managed to set new long-term highs, only to give up those gains in the second half of the day. For example, in the case of the DAX, this means a false breakout above 15,650 points, which is actually a mid-term sell signal, showing us the start of a small take-profit action.
The instrument that was in the spotlight yesterday was gold. Buyers were happy to see a proper rally on this metal, with the price breaking out from the pennant formation, surging above 2,000 USD/oz and setting new long-term highs. It seems that testing the all-time highs above 2,060 USD/oz is just a matter of time. However, it is also likely to be the place where a bearish correction will start, as it did in 2020 and 2022.
One reason for this surge on XAU/USD was the weaker dollar. EUR/USD climbed higher, aiming for yearly highs. USD/JPY dropped and broke the lower line of the flag, which brings us a technical sell signal. USD/CHF is breaking a key, long-term horizontal support at 0.91 as we speak, which should have dire consequences for demand.
The biggest move on the Forex market now belongs to the New Zealand Dollar. A few hours ago, we had an interest rate decision in New Zealand, and it was a surprising one! The market was expecting a small 25bp rise, but instead, the RBNZ decided on a bold rise of 50bp. It was a real shocker, considering that the RBA decided to leave the rates unchanged yesterday. This hawkish surprise brought us a rapid rise on the NZD, which is now the strongest currency among majors.
Today's calendar can be described in two words: Services PMIs. Many leading economies will publish this data, which is expected to be above 50 for all of them! Furthermore, it's NFP week, so as always, on Wednesday, we will have an aperitif with the Non-Farm Employment Change from the ADP.