New Zealand Dollar: Growth risks temper RBNZ pricing – ING

FXStreet Insights Team FXStreet

ING notes that New Zealand’s Q2 GDP slowdown could magnify market impact given infrequent data, but the Reserve Bank of New Zealand remains focused on inflation and jobs. The bank still expects one final hike in December, with rising odds of an October move, while NZD/USD is seen driven mainly by global risk sentiment and US events, with a 0.570–0.590 range into year-end.

GDP data and RBNZ path in focus

"New Zealand publishes second-quarter GDP data overnight. Expectations are for a material growth slowdown to just 0.1% QoQ after a strong first quarter (0.8%). Those figures play a secondary role for the Reserve Bank relative to inflation and jobs, but given the low (quarterly) frequency of key data releases, the market impact can be magnified."

"At its September meeting, the RBNZ delivered a dovish surprise, signalling there is only room for another 25bp to 3.0%. That should not be taken as a commitment, and the longer energy prices remain elevated, the higher the chances of upward revisions in policy projections by year-end."

"Our call remains for the next and last hike in December, but chances of an October move are increasing, with markets pricing in around 65% probability. Tomorrow's GDP can be an important input for those October expectations."

"That said, NZD/USD remains primarily driven by global risk sentiment and US events. We think the decline has a bit further to go on a Fed hike and risk assets' fragility. For the moment, we see 0.570 as a bottom, though, with room to bounce back towards 0.59 as early as year-end on some dovish Fed repricing."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)

Author

FXStreet Insights Team

FXStreet

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

AUD/USD hangs close to monthly lows, still defends 0.7100 ahead of Fed decision

AUD/USD retains its negative bias for the third straight day, defending 0.7100 while trading close to a monthly low in Wednesday's Asian session on Wednesday. The US Dollar stands firm near a two-week high as the anticipated Fed rate hike and oil-driven inflation fears continue to push US bond yields to a multi-year high. Furthermore, escalating Middle East tensions benefit the safe-haven buck and weigh on the risk-sensitive Aussie.

USD/JPY holds firm above 155.00, awaits Fed policy announcements

USD/JPY climbs to a fresh one-week high above 155.00 in the Asian session on Wednesday amid a bullish US Dollar. Oil-driven inflation fears, along with the anticipated Fed rate hike, continue to support surging US bond yields. Moreover, rising US-Iran tensions underpin the USD's reserve currency status. The pair, however, remains below the mid-155.00s as bulls seem hesitant ahead of the Fed decision later today and the BoJ meeting, starting on Thursday.

Gold traders seem noncommittal below $4,350; eyes Fed rate decision

Gold clings to modest intraday gains through the first half of the European session, albeit it lacks follow-through buying and remains below $4,350. The US Dollar eases from a two-week high amid some profit-taking, offering support to the commodity. Traders, however, seem hesitant to place aggressive directional bets and opt to wait on the sidelines heading into the key central bank event risk.

Cardano's bearish breakout warns of a 15% downside risk

Cardano (ADA) hovers around $0.1900 at press time on Wednesday after a 6% decline the previous day, breaking below a crucial support level. Declining on-chain activity across the Cardano ecosystem, with reduced transaction count and Real Economic Value (REV), suggests waning user demand.

Fed decision in focus

Starting with the most important, the Fed decision. Heading into the event, data showed a rather punchy US August jobs report, which, you will likely recall, triggered a hawkish Fed rate repricing in rates markets. However, the recent US August CPI print mattered more.

How Japan became the World's Banker and why that era may be ending

Japan's ultra-low interest rates helped finance trillions of dollars in global investments for more than a decade, making the Japanese Yen one of the world’s cheapest sources of funding. With the Bank of Japan expected to tighten policy again this week, that advantage may be entering a new phase. While most major economies raised interest rates, Japan remained the world's outlier.