Early Wednesday at 02:00 GMT market sees the key monetary policy decision by the Reserve Bank of New Zealand (RBNZ). Having initially turned down the bears New Zealand’s central bank is anticipated to adopt a dovish tone amid the latest coronavirus (COVID-19) woes. However, Governor Adrian Orr and the company isn’t famed for pleasing the bears, which in turn makes today’s release of quarterly Monetary Policy Statement, followed by Governor’s press conference around 03:00 GMT, as an important event. It should be noted that the RBNZ is widely anticipated to keep the benchmark interest rate unchanged at 0.25% but may signal changes to its Large Scale Asset Purchases (LSAP) during today’s meeting.

Ahead of the event, Australia and New Zealand Banking Group (ANZ) said,

The return of community transmission on our shores moves the risks dial even more in favor of our view that the RBNZ will look to do more rather than less, signaling they will do whatever is necessary to support the economy. Attention will also be on what the RBNZ says about other tools. We think they will keep their options open on all fronts, adding to dovishness.

Also joining the bears’ league is TD Securities that said,

For the 12th August meeting, we are expecting the RBNZ to announce an increase in the size of the LSAP program (from NZ$60 billion to NZ$78 billion) and for the program to be extended to August 21. The RBNZ could also announce an alternative set of measures to reduce the cost of funding.

How could it affect NZD/USD?

With the recent virus resurgence in the Pacific major, NZD/USD stands on a slippery ground near 0.6570, down 0.11% on a day, before the RBNZ on Wednesday. Also exerting downside pressure on the pair could be uncertainty surrounding September month election in New Zealand.

FXStreet’s Yohay Elam says, “The RBNZ is set to leave rates unchanged but hint about future policy and provide new forecasts. While recent economic performance has been upbeat, headwinds to the global economy remain prevalent, potentially triggering a dovish stance that may weigh on NZD/USD.”

Technically, the pair’s sustained break of an ascending trend line from March, at 0.6600 now, drives the quote further down towards a 50-day SMA level of 0.6544. However, the mid-July bottom near 0.6500 could restrict the pair’s further weakness. On the contrary, a falling trend line from July 31, currently around 0.6670, adds to the upside barriers for the pair in a case where RBNZ offers a positive surprise.

Keynotes

NZD/USD drops to fresh three-week low under 0.6600, eyes RBNZ

RBNZ Preview: Ending NZD/USD's recovery attempt? Dovish stance on QE and coronavirus may weigh

About the RBNZ interest rate decision and rate statement

The RBNZ interest rate decision is announced by the Reserve Bank of New Zealand. If the RBNZ is hawkish about the inflationary outlook of the economy and raises the interest rates it is positive, or bullish, for the NZD. The RBNZ rate statement contains the explanations of their decision on interest rates and commentary about the economic conditions that influenced their decision.

When is the RBNZ and how it could affect NZD/USD?