The big event focus tomorrow is the RBNZ November meeting due over the Asian session. Expectations are high heading into the meeting with the market pricing in a .25% rate hike, in line with the strength of data flow since the last meeting.
Given the expectancy of a hike, if the RBNZ hikes by just .25% this might see NZD lower out of disappointment. Alternatively, if the RBNZ hikes by .5% or significantly upgrades its forecasts and rate-path projections, this would be firmly bullish for NZD. Currently, there is around 40% pricing for a 0.5% hike so if we do see such a move, there is plenty of room for reaction in the market.
Where to Trade The RBNZ Meeting
Given the Bank of Japan's (BOJ) reaffirmed commitment to maintaining an easing presence in the market, there is stark policy divergence between itself and the RBNZ. If we see a bullish reaction in NZD from the RBNZ meeting, NZD/JPY is a strong candidate for a long trade. With around 70% of the retail market short, there is plenty of room for a pop higher here.
Price has been correcting lower within a well-defined channel and is currently testing the block of support between 79.17 and 80.03. Bulls can look for longs on a break of the channel top, targeting a move back up through 81.50 initially and 82.44 thereafter.
