- NZD/USD spikes above 0.5850 as US Dollar extends rally.
- The US dollar plummets as investors hope Bessent favors a more balanced tariff and tax policy.
- Investors expect the RBNZ to cut interest rates by 50bp to 4.25% on Wednesday.
The NZD/USD pair rises above 0.5850 in the North American session on Monday. The Kiwi pair strengthens as the US Dollar (USD) extends its correction driven by the selection of veteran hedge fund manager Scott Bessent as Treasury Secretary by President-elect Donald Trump. The US Dollar Index (DXY), which tracks the value of the Dollar, had a weak opening near 106.80 and extends its decline to near 106.60.
Reaction from market participants was negative for the US Dollar (USD) as Treasury yields fell after bond markets warmly welcomed an experienced hedge fund manager with the expectation that he would bring fiscal discipline. to the economy. “Bessent is seen as an antidote to Trump’s more extreme economic views,” said XTB’s Kathleen Brook. He added, “Bessent favors less government spending and is expected to advocate a slow and steady approach to potentially inflationary trade rates.”
Bessent also said in his interview with the Financial Times (FT) that he would focus on putting tariffs into action, cutting spending and maintaining the dollar’s status as the world’s reserve currency.
For further guidance on United States (US) interest rates, investors await October Personal Consumption Expenditures (PCE) Price Index data, due out on Wednesday. The report of the PCE show that price pressures grew at a faster pace year-on-year and increased steadily month-on-month from September readings.
Inflation data will influence market speculation about the Federal Reserve’s (Fed) decision on interest rates for its December meeting. According to the CME FedWatch tool, the probability that the Fed will cut interest rates by 25 basis points (bps) to 4.25%-4.50% in December is 56%, while the rest support keeping interest rates unchanged. stable.
Meanwhile, the New Zealand Dollar (NZD) will be guided by the Reserve Bank of New Zealand’s (RBNZ) interest rate decision, which will be announced on Wednesday. According to a Reuters poll, the RBNZ is expected to cut interest rates by 50 bps to 4.25%. This would be the second consecutive 50bp interest rate cut by the RBNZ and the third of the current rate easing cycle.
economic indicator
Interest rate decision
RBNZ Interest Rate Decision Announced by the Reserve Bank of New Zealand.This rate affects a range of interest rates set by commercial banks, building societies and other institutions towards their own savers and borrowers. It also tends to affect the price of financial assets, such as bonds, stocks and exchange rates, which affect consumer and business demand in a variety of ways.
Next post:
Wed Nov 27, 2024 01:00
Frequency:
Irregular
Dear:
4.25%
Previous:
4.75%
Fountain:
Reserve Bank of New Zealand
The Reserve Bank of New Zealand (RBNZ) holds monetary policy meetings seven times a year, announcing its decision on interest rates and the economic assessments that influenced its decision. The central bank offers clues about the economic outlook and future policy path, which are highly relevant to the valuation of the NZD. Positive economic developments and optimistic outlook could lead the RBNZ to tighten policy by raising interest rates, which tend to be bullish for the NZD. Policy announcements are usually followed by Governor Adrian Orr’s press conference.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
