• NZD/USD perched near the highs of the week ahead of FOMC.
  • US Dollar is under pressure amid poor PMIs while NZD is supported by a hawkish RBNZ. 

NZD/USD rallied to a high of 0.6236 on Wednesday, from a low of 0.6123 and was approaching its strongest levels in nearly three months after the Reserve Bank of New Zealand delivered a supersized 75 basis point rate hike to get ahead of inflation.

That hike was the largest since the RBNZ introduced the OCR in 1999 and brought the policy rate to a 14-year high of 4.25%. Meanwhile, in the statement, it was explained that the central bank's board expects the cash rate to peak at 5.5% in September 2023 according to its latest forecasts.

The members of the board had considered a 100Bp rate rise which fuelled the rally in the bird. Stubbornly high inflation and near-record-low unemployment in New Zealand supported the case for a more aggressive move. Finance Minister Grant Robertson said before the event that the country was well-positioned to withstand a global recession due to robust growth and a stable financial system.

The projected peak of 5.5% was well above consensus which led to the two-year swap rates to surge 29 basis points to 5.285%, the biggest daily jump since 2009. Analysts at ANZ Bank have revised their forecasts higher, now expecting an additional 50 bp increase in April and a 25 bp one in May, which would take the peak to 5.75%.

FOMC minutes eyed

Meanwhile, the US Dollar sold off on Wednesday in the early New York trade on the back of PMI's that are giving the bears a head start before the FOMC minutes are released. The overall data, for the most part, was solid but the emphasis was put on the shocking result in the US Manufacturing PMI that missed expectations by a mile:

In the prior statement, it read "In determining the pace of future increases in the target range, the Committee will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments."

This statement gave rise to volatility in markets as investors positioned for a softer approach from the Fed which Chair Jerome Powell pushed back against in his presser by suggesting that there will likely be a higher terminal rate. Therefore, the minutes will be scrutinised for clarity in this regard. ''We expect the November FOMC meeting minutes to shed further light on the FOMC's deliberations regarding the expected downshift in the pace of rate increases in upcoming meetings,'' analysts at TD Securities said. 

''But above all, we look for the minutes to place a lot of emphasis on the likelihood that the terminal rate will need to end up higher than anticipated initially. The Fed still needs to grind down the labour market to align wage and household spending growth with rates more consistent with the inflation target.''

NZD/USD

Overview
Today last price 0.6232
Today Daily Change 0.0080
Today Daily Change % 1.30
Today daily open 0.6152
 
Trends
Daily SMA20 0.5972
Daily SMA50 0.5827
Daily SMA100 0.6017
Daily SMA200 0.6307
 
Levels
Previous Daily High 0.6163
Previous Daily Low 0.6093
Previous Weekly High 0.6206
Previous Weekly Low 0.6062
Previous Monthly High 0.5874
Previous Monthly Low 0.5512
Daily Fibonacci 38.2% 0.6136
Daily Fibonacci 61.8% 0.612
Daily Pivot Point S1 0.611
Daily Pivot Point S2 0.6067
Daily Pivot Point S3 0.604
Daily Pivot Point R1 0.6179
Daily Pivot Point R2 0.6206
Daily Pivot Point R3 0.6249

 

 

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Feed news Join Telegram

Recommended content


Recommended content

Editors’ Picks

EUR/USD clings to recovery gains below 1.0400 ahead of German inflation

EUR/USD clings to recovery gains below 1.0400 ahead of German inflation

EUR/USD is holding onto recovery gains below the 1.0400 mark heading in early Europe. The renewed sell-off in the US Dollar amid the China reopening optimism underpins the Euro. Focus shifts to ECB-speak and Germany's inflation data. 

EUR/USD News

GBP/USD retreats from daily highs, holds above 1.2000

GBP/USD retreats from daily highs, holds above 1.2000

GBP/USD has lost its bullish momentum and retreated toward 1.2000 during the European trading hours on Tuesday. With the upbeat market mood not allowing the US Dollar to gather strength, however, the pair stays in positive territory ahead of US data, Bailey testimony.

GBPUSD News

Gold recovery needs acceptance above $1,760

Gold recovery needs acceptance above $1,760

Gold price picks up bids to reverse the previous day’s losses amid cautious optimism in the financial markets. Easing in China Covid numbers, efforts to defend reality sector join downbeat US Dollar to favor Gold buyers. Hopes of more positives from China signal further upside. 

Gold News

Can XRP price kick-start 30% upswing if China removes zero-Covid restrictions?

Can XRP price kick-start 30% upswing if China removes zero-Covid restrictions?

XRP price shows that it is taking its sweet time to overcome and sustain above a crucial resistance level. It could catalyze a quick run-up.

Read more

Hawkish Fed speak adds to macro headwinds

Hawkish Fed speak adds to macro headwinds

St. Louis Fed President James Bullard said in an online event that the Fed will need to hike rates into next year and that there is still "a ways to go" before a policy is "restrictive."

Read more

Forex MAJORS

Cryptocurrencies

Signatures