- NZD/USD is flat at Wall Street close.
- Kiwi traders will be watching the fourth quarter NZIER QSBO survey.
The pair NZD/USD it has ranged from a low of 0.6361 to a high of 0.6426, currently flat on the day though hovering near its strongest levels in a month. The kiwi has benefited from a risk appetite environment since the US dollar tumbled on the change in sentiment around the Federal Reserve’s rate path.
The moderation of US inflation has fueled bets for a less aggressive tightening by the Federal Reserve, while the reopening of China has strengthened the outlook for the world economy. In turn, there is a demand for raw materials for which the kiwi trades as a substitute.
However, with US markets closed for Martin Luther King Jr. Day and even tighter than normal liquidity in January, price action has been minimal on the day and week so far. . The kiwi is swinging either side of 0.64, although “upside risks come from a weakening dollar and downside risks mainly come from softening in local data and Fed rhetoric,” ANZ Bank analysts said. “Today it is likely to be all about local data, with the Q4 NZIER QSBO survey due at 10am. This is data the RBNZ watches, and if it ends up being as weak as our ANZBO survey in December, it could to see short-term local rates fall further, taking the Kiwi with them,” the analysts said.
The kiwi has been supported from a monetary policy standpoint after the Reserve Bank of New Zealand embarked on a historic tightening campaign, taking the cash rate to 4.25%, its highest level in 14 years. This has been the most aggressive tightening cycle since 1999, when the cash rate was first introduced. The RBNZ is the only central bank that is more hawkish than the Fed, and the rate spreads are much friendlier than, for example, compared to the Aussie, leaving the outlook bullish from a fundamental perspective. Although the RBNZ has a long way to go to bring inflation under control, it will need to start thinking about when to take its foot off the brake,” Westpac analysts say.
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.
