On Wednesday, the New Zealand and Japanese central banks will be in the spotlight, with an RBNZ rate decision and a BOJ governor’s speech.
NZDJPY – Daily Chart
The price of NZDJPY is trading at support levels dating back to late 2022. That will be a key decider on the next path, potentially moving to 75.24 if no buyers emerge.
The Kiwi dollar has slumped against the Japanese yen since 2024 as the Bank of Japan adopted a more hawkish tone on interest rates.
Wednesday further clarifies the interest rate differential between the kiwi dollar and the yen. A Reserve Bank of New Zealand interest rate decision arrives at 10 am HKT, with the central bank confirmed to cut rates by 25 basis points to 3.5%.
That will be followed at 2 pm with a speech from Bank of Japan Governor Ueda.
The RBNZ as expected to make the 25bps cut on Wednesday, and further cuts could also follow that as traders see tariffs as a headwind to the country’s exports.
The central bank has already cut interest rates by 200 basis points since August last year, with the former Governor Adrian Orr leaving the door open for rate cuts in April and May.
At its February meeting, the central bank said that “there is a risk of increased trade barriers and broader geoeconomic fragmentation,” and “an increase in trade restrictions is likely to reduce economic activity in New Zealand”.
U.S. President Donald Trump announced his long-awaited reciprocal tariffs 10% tariffs applied to New Zealand. The Pacific Nation does not intend to retaliate as their U.S. imports are limited.
However, there is the risk that tariffs will hurt the economic growth of New Zealand’s main trading partners, including Australia and China. A more negative outlook on global growth could see the bank continue its bias toward rate cuts, with markets expecting the cash rate in New Zealand to reach 2.75%, compared to 3% a week ago.
