Global macro overview for 23/07/2015:

The Reserve Bank of New Zealand reduced the Official Cash Rate (OCR) by 25 basis points to 3.0 percent today. This is the third rate cut since 2014, and the RBNZ continues reversing the period of rate hikes. The RBNZ has justified this cut by softening economic outlook (annual rate of 2.5%) and low inflation (below the central banks 1% to 3% target).

Nevertheless, despite the rate cut, the New Zealand dollar climbed by 1.5% against the US dollar. The market reaction is unlikely to be explained with the fact that the RBNZ statement was dovish (the further rate cuts are likely), but lack of aggressive tone and commitment for further easing that had been anticipated by market participants resulted in temporary NZD rally to the edge of the channel at the level of 0.6694.