- NZD/USD holds on to recovery above 0.5900 triggered by US Dollar correction.
- Investors await a series of economic indicators related to US employment.
- This week the RBNZ cut interest rates by 50bp to 4.25%.
The NZD/USD pair maintains gains above the 0.5900 round support level in the European session on Friday. The Kiwi pair strengthens as the US Dollar Index (DXY) extends its correction after falling below the key support of 106.00 and records a new two-week low near 105.60. However, it manages to recover some losses but is on track to close the week with a drop of almost 1.5%.
The US Dollar (USD) weakens as investors reduce so-called ‘Trump Trades’ after United States (US) President-elect Donald Trump nominated Scott Bessent to serve as Secretary of the Treasure. Market participants expect Bessent to execute Trump’s stated trade policies strategically and gradually with the intention of avoiding a deadly trade war.
Looking ahead, investors will focus on a series of data linked to US employment and the ISM manufacturing and services PMI data for November, due to be released next week. The series of economic data will influence market expectations for the Federal Reserve’s (Fed) monetary policy action in December.
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% at the December meeting is 66%, while the rest support leaving them unchanged.
Meanwhile, the New Zealand Dollar (NZD) is performing strongly even though market participants expect the Reserve Bank of New Zealand (RBNZ) to cut interest rates again by 50 bps at its next monetary policy meeting in February 2025 after reducing them by the same margin on Wednesday.
RBNZ Governor Adrian Orr has kept the door open for a large interest rate cut, but the decision will depend on economic conditions. Orr was confident of a further decline in inflationary pressures.
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.
Last post:
Wed Nov 27, 2024 01:00
Frequency:
Irregular
Current:
4.25%
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.
