New Zealand Dollar falls to seven-week low as RBNZ cuts interest rate by 50 bps

• The New Zealand Dollar edges lower in Wednesday’s early European session. 
• RBNZ cut the interest rate by 50 bps to 4.75% as anticipated. 
• The September FOMC Minutes will be in the spotlight on Wednesday. 

The New Zealand Dollar (NZD) loses momentum to near the lowest level since mid-August on Wednesday. The Reserve Bank of New Zealand (RBNZ) decided to cut the Official Cash Rate (OCR) by 50 basis points (bps) from 5.25% to 4.75% at its October meeting, as widely expected. The Kiwi attracts some sellers in an immediate reaction to the interest rate decision. Additionally, Chinese officials disappoint traders without more major stimulus. This, in turn, drags the proxy-China NZD lower against the Greenback as China is a major trading partner to New Zealand. 

Moving on, traders will keep an eye on the Federal Open Market Committee (FOMC) Minutes later on Wednesday. On Thursday, the attention will shift to the US Consumer Price Index (CPI) data for September. In case the report shows a softer-than-expected outcome, this could weigh on the USD and help limit the pair’s losses. 

Daily Digest Market Movers: New Zealand Dollar remains weak after RBNZ interest rate decision

• According to the RBNZ Monetary Policy Statement (MPS), the committee assesses that annual consumer price inflation is within its 1 to 3% inflation target range.
• The Committee agreed that it is appropriate to cut the OCR by 50 basis points to achieve and maintain low and stable inflation while seeking to avoid unnecessary instability in output, employment, interest rates, and the exchange rate, noted the RBNZ MPS. 
• Federal Reserve (Fed) Vice Chair Philip Jefferson said on Tuesday the US central bank's 50 basis points (bps) interest rate cut in September was aimed at keeping the labor market strong even as inflation continues to ease, per Reuters.
• Atlanta Fed President Raphael Bostic stated on Tuesday that the jobs market is not showing signs of weakness, adding that despite significant progress on inflation, overall price figures have not yet hit target levels. 
• New York Fed president John Williams said he strongly supported a rate cut by 50 basis points (bps) last meeting and that the two additional 25 bps reduction this year is a “pretty reasonable representation of a base case,” per Reuters. 

Technical Analysis: New Zealand Dollar resumes downside bias 

The New Zealand Dollar weakens on the day. The NZD/USD pair continues its downtrend as it crosses below the key 100-day Exponential Moving Average (EMA) and is poised to break below the ascending trend channel on the daily chart. The downward momentum is supported by the 14-day Relative Strength Index (RSI), which stands below the midline near 41.10, supporting the sellers in the near term. 

A decisive break below the lower limit of the trend channel of 0.6135 could pave the way to the 0.6000 psychological level. Sustained trading below this level could lead to a drop towards 0.5974, the low of August 15. 

On the upside, the 100-day EMA at 0.6142 acts as an immediate resistance level for the pair. Extended gains will see a rally to 0.6254, the high of September 6. The additional upside filter to watch is 0.6300, a round figure, en route to 0.6365, the upper boundary of the trend channel.