JPY Daily News

New Zealand Cuts Interest Rate; Japanese GDP Contracts

Yesterday the Reserve Bank of New Zealand slashed interest rates by 50 bp to bring the new rate lower to 2.5% from 3.00%. The move comes as the government tries to spur growth following 2 earthquakes, the most recent damaged New Zealand's second largest city. The RBNZ stated the loose monetary policy will remain in place until the rebuilding phase has passed.

In response, the New Zealand dollar lost further ground versus both the US dollar and Aussie dollar with the NZD/USD falling to its lowest level since December. The pair is currently testing the 0.7340 support level. A break below this price may trigger further technical selling of the pair with a target at the August 2010 high at 0.7200.

The Japanese economy shrank in Q4 with the decline more than economic forecasts. Japanese GDP contracted at an annualized rate of 1.3%. The previously reported number showed the Japanese economy contracted by 1.1%. However, a bright spot accompanied the report as machine orders rose in January by 4.2% which was well above market expectations.

The USD/JPY looks to be holding below the 83.00 level and could turn lower with support coming in at 82.50, a level that coincides with the 55-day moving average. A move below this level would target 82.20 followed by 81.50.

Current Time: 05/26 22:38 GMT

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#	Time	$€£¥	Event	Per.	Prev.	Fore.	Act.	Imp.
03/10
	06:00	JPY	Prelim Machine Tool Orders	y/y	89.8%	*	73.7%