The NZD was the best performer in Asia today, propped up by the news of a new RBNZ governor appointment. The NZD/USD pair jumped nearly 1% and reached new December highs at 0.6929 in response to the news that Adrian Orr has been appointed a governor of the Reserve Bank of New Zealand. He will begin his five-year term on March 27.
The announcement gave a boost to the New Zealand Dollar as the market views Adrian Orr as a balanced and credible choice. It is also important that he used to work for the Reserve Bank in the past already and has a vast insider experience, in contrast with his two predecessors. Though it is so far unclear, whether the new governor is a “dove” or “hawk”, in the short-term it is enough to dissipate some uncertainty. In the longer term, the market will be closely following the prospects of the “dual mandate” introduction under the new leadership.
Now, when NZDUSD regained the 0.69 mark, it is necessary to hold above and test the 0.6930 handle. If this local resistance is eroded, the 0.6945 will be on the radar. But this scenario is conditional on additional impetus from US Dollar weakness. Despite the Fed rate hike is already priced in, the greenback may attract some demand ahead of Wednesday’s Fed meeting, which may result in NZD/USD pullback after the recent rally.
By Helen Rush
Senior Analyst at Capital Markets