NZD/USD flys to fresh highs for the month on dovish Fed


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  • NZD/USD bulls jump in on a dovish Federal Reserve 25bp rate hike. 
  • Federal Open Market Committee Statement flags “some additional policy firming”.

With a dovish 25 bp hike, markets are pricing for the Fed's tightening cycle nearing an end and the US Dollar was sold off to test the bottom end of 102 DXY. Consequently, the NZ Dollar flew to a fresh high for the month at 0.6282 and was up from a low of 0.6171.

Today’s 25 bp hike was largely anticipated, but only aftermarket expectations whipsawed in recent weeks and the Federal Open Market Committee Statement flags “some additional policy firming” with the dot plot median pointing to one more hike. 

Before today´s Federal Reserve event, markets were pricing in a year-end target rate of 4.36%. This has dropped in volatile reactions to the statement to 4.26%. At the time of writing, US 2-year Treasury yields are down to 4.77%, dropping from 4.259% on the day to print a low of 3.958%. Consequently, the US Dollar index, DXY, fell to a low of 102.065 from a high of 103.265 and the bird took off. 

Fed event highlights

  • The median forecast shows rates at 5.1% end-2023, 4.3% end-2024.
  • 'Some additional policy firming may be appropriate.'
  • FOMC deletes reference to ongoing increases.
  • US banks are sound, resilient but events to weigh on growth.
  • Likely to see tighter credit conditions that weigh on economic activity, hiring and inflation.

Meanwhile, Fed´s chairman Jerome Powell spoke to the press:

Analysts at ANZ Bank explained said, for NZD specifically, ´´it’s still a bit of a tug of war between stock and flow, with the bullish flow traders citing the cyclone rebuild, remoteness from global banking issues, and Reserve Bank of New Zealand hawkishness, and the bearish stock traders citing our current account deficit, one-trick pony housing-centric economy, and credit ratings at risk.´´

NZD/USD

Overview
Today last price 0.6256
Today Daily Change 0.0062
Today Daily Change % 1.00
Today daily open 0.6194
 
Trends
Daily SMA20 0.6193
Daily SMA50 0.6306
Daily SMA100 0.6271
Daily SMA200 0.6162
 
Levels
Previous Daily High 0.6258
Previous Daily Low 0.6167
Previous Weekly High 0.6278
Previous Weekly Low 0.6131
Previous Monthly High 0.6538
Previous Monthly Low 0.6131
Daily Fibonacci 38.2% 0.6202
Daily Fibonacci 61.8% 0.6223
Daily Pivot Point S1 0.6155
Daily Pivot Point S2 0.6115
Daily Pivot Point S3 0.6064
Daily Pivot Point R1 0.6246
Daily Pivot Point R2 0.6297
Daily Pivot Point R3 0.6337

 

 

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