New Zealand Dollar struggles to lure buyers as weak USD limits losses
- NZD/USD struggles to capitalize on its modest recovery from the post-RBNZ swing low.
- Falling bond yields and Iram diplomacy hopes weigh on the USD, supporting the pair.
- The fundamental backdrop favors bearish traders and backs the case for further losses.
The NZD/USD pair edges lower during the Asian session on Friday, reversing a part of the previous day's modest uptick and stalling its bounce from a two-week low, touched after the Reserve Bank of New Zealand (RBNZ) decision on Wednesday. Spot prices currently trade around the 0.5630-0.5625 region and remain on track to register heavy losses for the first time in the previous three weeks.
The RBNZ unexpectedly left its Official Cash Rate (OCR) unchanged at 2.75%, disappointing investors who had priced in a near-certain 25-basis-point (bps) rate hike. Four members, including RBNZ Governor Anna Breman, preferred to hold and assess the lag effects of previous rate hikes in July and September, overshadowing the committee's tightening bias and acting as a headwind for the New Zealand Dollar (NZD). That said, the downside for the NZD/USD pair seems cushioned as the US Dollar (USD) remains under some selling pressure for the third straight day.
Renewed hopes of diplomatic engagement between the US and Iran prompt traders to price out the geopolitical risk premium, which is evident from a steep decline in US bond yields and weighs on the safe-haven buck. That said, investors remain wary amid the US-Iran standoff over the Strait of Hormuz, and escalating hostilities between the Iran-backed Houthis and Saudi Arabia. The uncertainty remains supportive of elevated crude oil prices, fueling inflationary concerns and bolstering hawkish US Federal Reserve (Fed) expectations. This could help limit USD losses.
According to CME Group's FedWatch Tool, traders see around a 75% chance that the US central bank will raise borrowing costs in December. The bets were reaffirmed by Thursday's US macro data, which showed that economic growth accelerated to a 3.4% annualized pace during the third quarter and inflation rose in September. This, in turn, backs the case for the emergence of some USD buying at lower levels, suggesting that the path of least resistance for the NZD/USD pair remains to the downside and any meaningful recovery attempt is more likely to be sold into.
US Dollar Price Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the New Zealand Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.20% | -0.15% | -0.27% | -0.15% | 0.09% | 0.09% | -0.48% | |
| EUR | 0.20% | 0.05% | -0.09% | 0.06% | 0.30% | 0.28% | -0.28% | |
| GBP | 0.15% | -0.05% | -0.13% | 0.01% | 0.25% | 0.24% | -0.33% | |
| JPY | 0.27% | 0.09% | 0.13% | 0.14% | 0.37% | 0.37% | -0.20% | |
| CAD | 0.15% | -0.06% | -0.01% | -0.14% | 0.23% | 0.23% | -0.34% | |
| AUD | -0.09% | -0.30% | -0.25% | -0.37% | -0.23% | -0.01% | -0.56% | |
| NZD | -0.09% | -0.28% | -0.24% | -0.37% | -0.23% | 0.00% | -0.56% | |
| CHF | 0.48% | 0.28% | 0.33% | 0.20% | 0.34% | 0.56% | 0.56% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
Author
Haresh Menghani
FXStreet
Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.
