- NZD/USD bulls move in to test mid-week highs.
- US red news on the calendar will be key for the pair to end the week.
NZD/USD is currently trading at 0.6500 and is 0.3% higher at the start of Friday with the bird taking flight on a softer US Dollar ahead of key data for the US session ahead. The pair has rallied from a low of 0.6482 to a high of 0.6506 so far, reaching the highs of Wednesday with the multi-month highs in sight that were made following New Zealand's Consumer Inflation data that held near three-decade highs in the fourth quarter.
New Zealand’s annual inflation stood at 7.2% in the December quarter, higher than market expectations for a 7.1% rise but below the Reserve Bank of New Zealand’s forecast of 7.5% Nevertheless, this was bolstering expectations of less aggressive interest rate hikes in the coming months. There is sentiment for only a 50 basis point rate hike in February after delivering a record 75 basis point increase in November.
Meanwhile, the focus is back on the Federal reserve which will make its interest rate decision on February 1. On Thursday, the US Gross Domestic Product data reading was strong and this will give the members of the Federal Open Market Committee plenty to consider as it enters its policy discussions next week. The advanced Q4 GDP came in slightly stronger than expected at 2.9% vs 3.2% in Q3.
Analysts at ANZ Bank said that the upcoming personal income, expenditure and deflator data (due out tonight) is arguably more important. ''Consensus expects a 0.1% decline in real personal spending. That would be the first decline in 12 months and the first fall that was not driven by COVID-19 restrictions for quite a few years,'' the analysts argued. ''The core deflator is forecast at 0.3% MoM with annual inflation at 4.4% YoY. That would be the lowest print since October 2021, and while still too high would sit well with the idea of the FOMC entering a more considered phase of the tightening cycle.''
Key data for NZ coming up
Looking ahead, the New Zealand fourth quarter labour market data (out next week) where the wages will be monitored. Analysts at ANZ Bank said that the RBNZ will have a little more scope to dial back the pace of OCR hikes if these wage spirals were to cool as the central bank feels out an appropriate level for the OCR where the MPC can comfortably “watch, worry and wait”. ''We think that speaks to a 50bp hike in February, and a peak of 5.25%.''
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.
Recommended content
Editors’ Picks
EUR/USD holds above 1.0650 after US data
EUR/USD retreats from session highs but manages to hold above 1.0650 in the early American session. Upbeat macroeconomic data releases from the US helps the US Dollar find a foothold and limits the pair's upside.
GBP/USD retreats toward 1.2450 on modest USD rebound
GBP/USD edges lower in the second half of the day and trades at around 1.2450. Better-than-expected Jobless Claims and Philadelphia Fed Manufacturing Index data from the US provides a support to the USD and forces the pair to stay on the back foot.
Gold clings to strong daily gains above $2,380
Gold trades in positive territory above $2,380 on Thursday. Although the benchmark 10-year US Treasury bond yield holds steady following upbeat US data, XAU/USD continues to stretch higher on growing fears over a deepening conflict in the Middle East.
Ripple faces significant correction as former SEC litigator says lawsuit could make it to Supreme Court
Ripple (XRP) price hovers below the key $0.50 level on Thursday after failing at another attempt to break and close above the resistance for the fourth day in a row.
Have we seen the extent of the Fed rate repricing?
Markets have been mostly consolidating recent moves into Thursday. We’ve seen some profit taking on Dollar longs and renewed demand for US equities into the dip. Whether or not this holds up is a completely different story.