Giles Coghlan LLB, Lth, MA
Financial Source
At the last RBNZ meeting, the bank took a decidedly hawkish tone. The RBNZ recognises that annual inflation remains too high at 7.2% and it hiked by 75bps to 4.25%. This 75 bps was expected, but the surprise was that the RBNZ now sees itself needing to hike interest rates at a faster pace and considered a 100bps rate hike. This should keep the NZDUSD supported as long as there are reasons for USD weakness.
The US is focused, like most countries on inflation data, if there is a big miss in the US Core PCE today and a big miss in the NFP data tomorrow then it would be reasonable to expect some USD weakness. However, the main event, of course, will be the Fed decision on December 14.
Over the last 20 years, the NZDUSD has had a bias for strength into the end of the year. It has gained 16 times and only lost value 4 times with an average return of 1.73%.
Major Trade Risks: The major risk here is that US inflation keeps gaining higher, the Fed keeps aggressive and US jobs remain strong which will likely keep the USD bought.
Our products and commentary provides general advice that do not take into account your personal objectives, financial situation or needs. The content of this website must not be construed as personal advice.
Recommended Content
Editors’ Picks
AUD/USD: Extra gains in the pipeline above 0.6520
AUD/USD partially reversed Tuesday’s strong pullback and regained the 0.6500 barrier and beyond in response to the sharp post-FOMC pullback in the Greenback on Wednesday.
EUR/USD meets support around 1.0650
EUR/USD managed to surpass the key 1.0700 barrier in response to the intense retracement in the US Dollar in the wake of the Fed’s interest rate decision and Chair Powell’s press conference.
Gold surpasses $2,300 as Dollar tumbles
The precious metal maintains its constructive stance and trespasses the $2,300 region on Wednesday after the Federal Reserve left its FFTR intact, matching market expectations.
Bitcoin price reclaims $59K as Fed leaves rates unchanged
The market was at the edge of its seat on Wednesday to see whether the US Federal Reserve (Fed) would cut interest rates during the Federal Open Market Committee (FOMC) meeting.
The market welcomes the Fed's statement
The market has welcomed the Fed statement, and the S&P 500 is higher in its aftermath, the dollar is lower and Treasury yields are falling. There is still only one cut priced in by the Fed.