Alan Bollard, governor of Reserve Bank of New Zealand, is expected to keep interest rate unchanged; it is when the economy increasingly shows signs of slowing.
At the same time, we see in recent days that almost every economic data from US beats analysts' estimates.
However I am not comfortable in simply selling NZDUSD in less than one hour to interest rate announcement. But what makes it so difficult:
- Despite the depreciation of NZD in recent days, it seems that there is more room for NZDUSD to fall, but the problem is that I have no clear idea about how low the currency could fall.
- Another source of uncertainty is about the tone of the announcement. Many suggest that Bollard will signal easing but I am not sure.
- Finally, there are always buyers for a currency with 8.25 interest rate. In the very short term I am a buyer myself!
So, I prefer to wait until seeing signs of rebound in NZDUSD, then I may go long. I think it is very likely that the interest rate announcement will make a buying opportunity, again in a short term.
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