Hawkish Hold From RBNZ Drives Kiwi Volatility

NZD Spikes HigherThe New Zealand Dollar was among the big winners yesterday as USD reversed lower. NZDUSD traded to its highest level since August earlier today before selling kicked in to fuel a correction lower. Overnight, the RBNZ was seen holding rates unchanged at 5.5%, in line with expectations. However, the bank warned that further tightening could not be ruled out and might still be necessary depending on how inflation develops in coming months.  Inflation Still Too HighThe central bank noted that domestic inflation still remains too high. As such, the RBNZ will monitor the path of CPI in coming months and act accordingly. With central banks elsewhere seen to be pulling away from further tightening, the RBNZ’s message was something of a hawkish surprise, fuelling the spike higher we saw in NZD today. While the pair has largely conceded those gains for now, traders will be looking to the upcoming US GDP report later today. If the data undershoots forecasts, this might well provide the platform for fresh buying in the pair, taking NZDUSD back up into the second half of the week.Technical ViewsNZDUSDThe rally in NZDUSD has seen the pair breaking out above the bear channel from YTD highs and above the .6092 level. This is a key technical break for the pair and while above here, focus is on a further push higher in line with bullish momentum studies readings. Price is currently held up at the .6210 level though while .6092 holds focus is on .6385 as the next target.