Kiwi is recapturing the bullish trend after the release of monetary policy today. A senior central bank official said that the delta variant of the corona virus in New Zealand is not yet a “game changer” and there is no pressure to act on monetary policy. At this point, our basic economic analysis and vision should be thrown out the window and we do not see it as a game changer in the sense that we have to start all over again. “We weren’t like 12 months ago,” said Yuang Ha, chief economist at the Reserve Bank of New Zealand (RBNZ) in a telephone interview with Reuters.

And he also said that there is no pressure to act on monetary policy and say New Zealand going into nationwide lockdown at a better economic starting point. The comments come after the RBNZ held its cash rate unchanged at its meeting last week. In the weeks and days leading up to the decision, there was a near-unanimous consensus the bank would hike the rate by 25bps and even 50bps was a not unusual view. However, the fresh outbreak of COVID-19 in the country just prior to the Bank’s meeting saw analysts trash their calls for a hike. The RBNZ duly held steady.

When asked if pressure was growing on RBNZ to act on policy, Ha said: “I don’t think so. I think we are in a really good position in terms of optionality.” Ha said the central bank has learnt from previous lockdowns that demand and household spending tend to bounce back quite quickly especially given the level of fiscal support that’s also been activated at present.

New Zealand’s successful elimination of COVID-19 fired a hot economic recovery and stoked inflation, which had prompted analysts to forecast at least two hikes before year-end. But the latest COVID-19 outbreak has led many analysts to push out their tightening calls, with the market pricing a 60% chance of a hold at the RBNZ’s next meeting on Oct. 6.

Last week, the RBNZ delayed raising rates after the country was put into a COVID-19 lockdown following the outbreak, although policymakers flagged tightening was on the cards before the year was out. New Zealand has reported 35 new cases of Covid-19, of the 107 cases in the cluster, 72 are already epidemiologically linked to other community cases identified in the outbreak. Investigations are continuing to determine whether and how the remaining 35 cases are linked to the outbreak. Meanwhile, the kiwi could come unstuck if the sentiment sours further.

NZD/USD 4 Hour Chart:

Support: 0.6814 (S1), 0.6791 (S2), 0.6777 (S3).

Resistance: 0.6852 (R1), 0.6866 (R2), 0.6889 (R3).

Amidst this above catalysts Kiwi is on upward moment today. We expect a bullish trend NZD/USD.