Kiwi showed downtrend showing reaction to the recent August RBNZ monetary policy decision and Country lock down.  New Zealand RBNZ releases it monetary policy today, which agreed to kept the Official Cash Rate (OCR) on hold at 0.25 per cent for now. Reserve Bank governor Adrian Orr said on today that decision made among the alert level of Covid 4 restrictions on activity across New Zealand. The committee said their “least regrets policy stance” was still to further reduce the level of monetary stimulus so as to anchor inflation expectations and continue to contribute to maximum sustainable employment. But they agreed, however, to keep the OCR unchanged at this meeting given the heightened uncertainty with the country in a lockdown.

“I want to assure New Zealand that we have planned for this eventuality. Going hard and early has worked for us before,” Ardern said at a news conference. “We’ve seen the dire consequences of taking too long to act in other countries.” New Zealand has so far largely kept the virus out of the community, allowing its economy to recover quickly during the pandemic. But a slow vaccine rollout has left it vulnerable to another outbreak, particularly of the delta variant that has forced large parts of neighboring Australia back into lockdown. The case comes on the eve of the Reserve Bank’s review of the official cash rate. Prior to news of the lockdown, a majority of economists were forecasting a quarter percentage point hike in response to an overheating economy.

“The Kiwi rebounded once the market realised that the tightening is still happening but that it has just been pushed out by one meeting,” Westpac senior markets strategist Imre Speizer said.  The discovery came the day before a policy announcement by the Reserve Bank of New Zealand, which was widely expected to become the first central bank in the developed world to raise interest rates since the onset of the pandemic. But RBNZ did not act as expected.

On the other hand national lock-down has been announced by New Zealand Prime Minister Jacinda Ardern into a three day lockdown after first case found in Auckland since covid-19 case from February. The snap lockdown will begin on today to find the source of source of a single infection in largest city Auckland, Ardern said at a news conference Tuesday in Wellington. While genome sequencing has yet to be completed, the case is assumed to be the highly infectious delta variant, she said. However, New Zealand’s vaccination rate is low, leaving the nation of 5 million vulnerable – a fact underscored by the latest detection of the highly infectious Delta variant which has hobbled neighbouring Australia.

NZD/USD 4 Hour Chart:

Support: 0.6869 (S1), 0.6820 (S2), 0.6739 (S3).

Resistance: 0.6998 (R1), 0.7079 (R2), 0.7128 (R3).

Amidst this above catalysts kiwi is on downtrend today. We expect a bearish trend for NZD/USD.