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NZD/USD at new 1-month highs thanks to a dovish Fed

  • NZD/USD bulls are betting on a moderate 25 basis point rate hike from the Federal Reserve.
  • The Federal Open Market Committee’s statement points to “some additional firmness in monetary policy.”

Modestly up 25 basis points, markets are pricing in the Fed’s tightening cycle coming to an end and the US dollar has sold off to test levels below 102. Consequently, the New Zealand dollar has made a new high. month at 0.6282 and rose from a low of 0.6171.

Today’s 25 basis point rise was largely expected, but only after market expectations ran wild in recent weeks and the Federal Open Market Committee statement signaled “some additional firmness in policy”, with the median of the dot chart pointing to one more rise.

Ahead of today’s Federal Reserve meeting, markets were pricing in a year-end target rate of 4.36%. The volatility of the reactions to the statement has reduced it to 4.26%. As of this writing, the 2-year US Treasury yield has dipped to 4.77%, from 4.259% the day before to 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 climbed.

Analysts at ANZ Bank explained that, in the specific case of the New Zealand dollar, “there is still a bit of a tug-of-war between stocks and flows, with bulls citing post-cyclone rebuilding, remoteness from banking woes and the hawkish stance of the Reserve Bank of New Zealand, and bears citing our current account deficit, a housing-centric economy and risks to credit ratings.”

NZD/USD

Overview
Last price today 0.6256
Today Change Daily 0.0062
today’s daily variation 1.00
today’s daily opening 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 minimum 0.6131
Fibonacci daily 38.2 0.6202
Fibonacci 61.8% daily 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

Source: Fx Street

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