NZD/USD leans lower in consolidation phase

• NZD/USD consolidates early in the week on mixed risk sentiment.
• The poor performance of the crosses suggests that the Kiwi is still not in good health.

The NZD/USD pair is flat after falling 1% last week on fears of a repeat of the systemic banking crisis that swept the markets in 2008. So far this day, the NZD/USD has ranged from a low of 0.6180 and a high of 0.6211.

Sentiment, however, remains fragile due to concerns over a global credit crunch. ”The roller coaster continues, once again leaving currency markets largely intact. Which leads us to wonder: will New Zealand’s remoteness from all this make the dollar stronger if the RBNZ manages to get the OCR to 5¼%? It’s possible, especially if things falter enough to prevent the Fed from tightening much more, but not enough to bring the whole thing crashing down,” ANZ Bank analysts explain, “but poor performance of the crosses suggests that the kiwi is still not in good health.

On the other hand, the surprising contraction in New Zealand’s growth numbers in the fourth quarter of 2022 came at a time when the RBNZ continues to try to cool runaway inflation. The central bank has raised its interest rate by a total of 450 basis points in ten consecutive meetings, bringing the cash rate to a 41-year record of 4.75%.

For her part, IMF Director Kristalina Georgieva declared on Sunday that 2023 will be another difficult year, with global growth slowing to below 3%, reflecting the impact of pandemic disruptions, the war in Ukraine and monetary tightening. . She added that even with better prospects for 2024, global GDP will remain below its historical average of 3.8% and the overall outlook remains weak.