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    RBNZ Rate cut priced in as Kiwi Dollar flies

    Despite RBNZ cutting the OCR and telling market that a weaker NZD and further interest rate cuts are necessary the New Zealand Dollar rose sharply across all major crosses. 

    Statement notes (view full statement)
    - Growth outlook is now softer than at the time of the June Statement
    - Rebuild activity in Canterbury appears to have peaked
    - NZ dairy exports have fallen sharply
    - Headline inflation below the Bank’s 1 to 3 percent target range
    - Low inflation down to [previously] high NZD and decline in Oil prices
    - Recent exchange depreciation to see inflation return to midpoint [2%] by mid 2016
    - A key uncertainty is how quickly the exchange rate pass-through will occur
    - Rapidly rising house prices contained to Auckland
    - Significant building work underway in Auckland
    - NZD has depreciated significantly since april [25%] 
    - Lower NZD will provide support to export and import sectors
    - Further NZD depreciation is necessary given the weakness in export commodity prices
    - At this point, some further easing seems necessary


    It was widely expected the cut would happen today so we can assume that large short positions were closed at the release to book profits, sending the Kiwi Dollar higher. Immediately at the release we saw NZD gap higher with the dovish statement seemingly having little impact on price action. 

    Gaps at the release
    NZDUSD: 68 pips
    NZDJPY: 63 pips
    NZDCAD: 59 pips
    NZDCHF: 55 pips

    AUDNZD: -68 pips
    GBPNZD: -155 pips
    EURNZD: -157 pips

    The question now is if we will see those gaps filled or a continuation of the move in the direction of the gaps (NZD strength). 

    However a word of caution for traders looking to take long position. If we look at the daily range compared to the 10 and 60 ATR settings we can see it has already moved 'typical' daily range, which is something to consider before taking long positons and projecting targets.  

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