New Zealand was all set to become one of the first major central banks to embark on a hiking cycle as the economy began to run hot. Moving into the RBNZ meeting last month the expectations were that the RBNZ was going to hike rates. Unemployment was at a low (4.0%), inflation high (3.3% y/y), tapering had stopped on July 23 and the largest investment banks in the regions were predicting three hikes before year-end. However, it was the resurgence of COVID-19 that seemed to hold the central bank back at the latest central bank meeting. A single case of COVID-19 was found and this sent the nation into an entire lockdown. However, immediately after the decision Governor Orr said that COVID cases alone will not stop a rate hike and needs to move on policy and cannot wait for uncertainty to lift. RBNZ’s Hawkesby later reinforced this view at the end of August when he said the week that the RBNZ considered raising the official cash rate by 50 bps at the last meeting.

COVID-19 under control in New Zealand with ‘mystery cases’ risk

New Zealand is confident that its policy of elimination works. Since the first new case in August, the peak has seemed to have passed (see cases below as of Sep 14). However, one concern is that of so-called ‘mystery cases’. These are cases of Covid with no apparent link of transmission that can be understood. The previous peak number of cases was 89 per day in April 2020 and New Zealand was quick to handle that outbreak.


The CHF is weak as SNB repeat the need for negative rates

The SNB has the lowest interest rates in the world at -0.75% as they try to discourage inflows into the CHF. SNB’s Zurbruegg said earlier this week that native interest rates from the SNB are still needed to curb CHF gains. The SNB actively try to weaken the CHF in order to help their export market. A strong CHF means that Swiss exports are dear to the rest of the world, Also remember that as a safe haven currency CHF, alongside the JPY, often sees strength in risk-off markets. So, any temporary bids into the CHF could see a fall in NZDCHF, but medium-term the case for buyers remain.

The chart

Support here remains a good value for medium-term NZDCHF buying as long as the case remains as outlined above.


Learn more about HYCM

High Risk Investment Warning: Contracts for Difference (‘CFDs’) are complex financial products that are traded on margin. Trading CFDs carries a high degree of risk. It is possible to lose all your capital. These products may not be suitable for everyone and you should ensure that you understand the risks involved. Seek independent expert advice if necessary and speculate only with funds that you can afford to lose. Please think carefully whether such trading suits you, taking into consideration all the relevant circumstances as well as your personal resources. We do not recommend clients posting their entire account balance to meet margin requirements. Clients can minimise their level of exposure by requesting a change in leverage limit. For more information please refer to HYCM’s Risk Disclosure.

Feed news

How do emotions affect trade?
Follow up our daily analysts guidance

Subscribe Today!    

Latest Forex Analysis

Latest Forex Analysis

Editors’ Picks

EUR/USD holds above 1.1700 but the upside is limited

The EUR/USD pair flirted with 1.1750 but was unable to retain its modest intraday gains. Now trading in the 1.1720 price zone, bears retain control ahead of the US central bank monetary policy decision.


GBP/USD: Pressure mounts ahead of central banks’ announcements

The Fed and the BoE will make announcements this week. UK public inflation expectations are up for this year and the upcoming ones. GBP/USD is technically bearish in the near term, poised to retest August monthly low.


Gold: Further advances depend on the Fed

A better market mood put pressure on the American currency. The US Federal Reserve will announce its monetary policy decision on Wednesday. Gold advanced for a second day in a row, but additional gains are in doubt.

Gold News

Shiba Inu bulls can't hold SHIB from dropping to $0.000006

Shiba Inu price has fallen -28% over the past four trading sessions. Bears remain in control as bulls fail to complete a breakout above $0.000008. Bulls must hold $0.000007 to prevent a drop towards $0.000006.

Read more

Fed Preview: Three ways in which Powell could down the dollar, and none is the dot-plot

No taper now, but when? That is the main question for the Fed in its all-important September meeting. The bank buys $120B worth of bonds every month and it is set to reduce the pace at some point – the first step toward raising interest rates. 

Read more