Morning Note: RBNZ Eases Policy; Aussie Inflation Surprises; Tesla Struggles in Europe

RBNZ Cuts Rates by 25bps to 3.25%

New Zealand’s central bank cut its benchmark rate by 25 basis points to 3.25% and signalled a slightly deeper easing cycle than previously projected in February. This move reflects growing concerns over global economic risks, particularly those stemming from the shift in U.S. trade policy under President Trump. Since August 2024, the Reserve Bank of New Zealand (RBNZ) has lowered rates by a total of 225 basis points, taking advantage of subdued inflation to support the economy.

In its latest policy statement, the RBNZ noted that inflation remains within the 1% – 3% target band, currently at 2.5%, and is expected to rise to 2.7% in Q3. Policymakers said they are well-positioned to respond to both domestic and global developments to maintain price stability. The central bank now forecasts that the cash rate will fall to 2.92% by Q4 2025 and to 2.85% by Q1 2026. Markets anticipate at least one more rate cut this year, given the current outlook for inflation.

(NZD/USD Daily Chart, Source: Trading View)

From a technical analysis perspective, the NZD/USD currency pair has been in a bullish trend since the beginning of April 2025, as indicated by the formation of higher highs and higher lows. Recently, the pair was rejected from the resistance zone between 0.6015 and 0.6045, pushing it lower. However, if the pair can close above the swap zone of 0.5825 – 0.5850 in the near term, it may potentially resume its upward movement and retest the resistance zone again.

Aussie Inflation Beats Forecasts in April

Australian consumer prices rose more than expected in April, as higher insurance and holiday costs offset a decline in petrol prices. The Australian Bureau of Statistics reported on Wednesday that the monthly consumer price index (CPI) increased by 2.4% year-on-year, matching March’s figure but surpassing the median forecast of 2.1%. Core inflation also ticked higher, making the overall report somewhat disappointing.

Despite the inflation data, the Reserve Bank of Australia (RBA) had earlier lowered interest rates to a two-year low, citing subdued domestic inflation as room to buffer against global trade uncertainties. The central bank signalled openness to further easing in the coming months. Meanwhile, the labour market remains unexpectedly strong, consistently generating new jobs and keeping the unemployment rate at a low 4.1%.

(AUD/USD Daily Chart, Source: Trading View)

From a technical analysis perspective, the AUD/USD currency pair has been in a bullish trend since the beginning of April 2025, as indicated by the formation of higher highs and higher lows. Recently, the pair was rejected from the resistance zone between 0.6510 and 0.6530, pushing it lower. However, if the pair can close above the swap zone of 0.6350 – 0.6370 in the near term, it may potentially resume its upward movement and retest the resistance zone again.

Tesla EU Sales Dropped 49% in April

Tesla's European sales took a sharp hit in April, with just 7,261 vehicles sold, marking a 49% year-on-year decline, according to the European Automobile Manufacturers' Association. The drop is particularly striking given that overall battery electric vehicle (BEV) sales in the region climbed 34.1% during the same period. Over the first four months of the year, Tesla's sales in Europe were down nearly 40%, highlighting ongoing challenges for the automaker in a growing market.

Much of the backlash stems from CEO Elon Musk's political alignment with U.S. President Donald Trump, which has sparked protests at Tesla dealerships across Europe and drawn criticism from investors concerned about Musk’s split priorities. Although Musk has pledged to reduce his government advisory commitments by the end of May, he still plans to dedicate one to two days per week to those roles, while assuring stakeholders he will remain at Tesla’s helm for at least another five years.

(Tesla Share Price Daily Chart, Source: Trading View)

From a technical analysis perspective, Tesla’s share price has been in a bullish trend since mid-March 2025, as indicated by the formation of higher highs and higher lows. Currently, it is retesting the resistance zone between 352 and 364. If the price breaks above this zone, it may potentially surge upward to retest the order block between 420 and 430. Conversely, if the resistance holds, bearish pressure could potentially push the price lower to retest the swap zone between 274 and 286.

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Past performance is not indicative of any future results. This information is provided for informative purposes only and should not be construed to be investment advice.