Kiwi Dollar tries to fly despite RBNZ’s wait-and-see approach

Alexander Kuptsikevich FxPro

The Reserve Bank of New Zealand left its key rate unchanged for the second time at 5.5%. Most analysts predicted this decision, but it created positive momentum in the NZDUSD, which at one point added about 1% to the day's lows set before publication.

The RBNZ's mood has clearly shifted from raising the rate to keeping it at the current restrictive level for an extended period of time. The Central Bank notes a decline in activity in the sectors most sensitive to interest rates. In addition, they emphasise the reduction of labour shortage due to migrants and softening demand.

The positive reaction of the currency market to the Central Bank's comments has a chance to be the starting point for a corrective recovery or even the beginning of the growth of NZD, which by mid-August was at historic lows against CHF and multi-year lows against EUR & GBP.

NZDUSD lost about 7.4% in about a month, and the intraday dip was at its lowest since last November at 0.5930. On the daily timeframes, the RSI flirted with oversold territory the day before, which hasn't been seen since October 2022. A rise out of this area is a bullish signal, which was also well worked out by NZDUSD, adding over 15% in the last two months.

Author

Alexander Kuptsikevich

FxPro

Alexander Kuptsikevich, a senior market analyst at FxPro, has been with the company since its foundation. From time to time, he gives commentaries on radio and television. He publishes in major economic and socio-political media.

EUR/USD meets initial support around 1.1800

EUR/USD remains on the back foot, although it has managed to reverse the initial strong pullback toward the 1.1800 region and regain some balance, hovering around the 1.1850 zone as the NA session draws to a close on Tuesday. Moving forward, market participants will now shift their attention to the release of the FOMC Minutes and US hard data on Wednesday.

GBP/USD bounces off lows, retargets 1.3550

After bottoming out just below the 1.3500 yardstick, GBP/USD now gathers some fresh bids and advances to the 1.3530-1.3540 band in the latter part of Tuesday’s session. Cable’s recovery comes as the Greenback surrenders part of its advance, although it keeps the bullish bias well in place for the day.

Gold remains offered below $5,000

Gold stays on the defensive on Tuesday, receding to the sub-$5,000 region per troy ounce on the back of the persistent move higher in the Greenback. The precious metal’s decline is also underpinned by the modest uptick in US Treasury yields across the spectrum.

RBNZ set to pause interest-rate easing cycle as new Governor Breman faces firm inflation

The Reserve Bank of New Zealand remains on track to maintain the Official Cash Rate at 2.25% after concluding its first monetary policy meeting of this year on Wednesday.

UK jobs market weakens, bolstering rate cut hopes

In the UK, the latest jobs report made for difficult reading. Nonetheless, this represents yet another reminder for the Bank of England that they need to act swiftly given the collapse in inflation expected over the coming months.

Ripple slides to $1.45 as downside risks surge

Ripple edges lower at the time of writing on Tuesday, from the daily open of $1.48, as headwinds persist across the crypto market. A short-term support is emerging at $1.45, but a buildup of bearish positions could further weaken the derivatives market and prolong the correction.