New Zealand Dollar steadies near its lows as RBNZ hike bets keep building
Five straight weekly declines have left NZD/USD at its lowest since late June. Monday's low near 0.5650 matched Thursday's and Friday's, and the pair closed just above it with a small gain. Markets now price about an 80% chance that the Reserve Bank of New Zealand (RBNZ) raises its Official Cash Rate (OCR) to 3% from 2.75% on October 28, against roughly a one-in-three chance right after the September 2 hike.
The RBNZ decides ten days before New Zealand votes
RBNZ Governor Breman said on September 22 that higher Crude Oil prices could push near-term inflation above what the RBNZ assumed in September, and hike bets have built since. Second-quarter GDP beat forecasts on September 17 and revisions lifted the first quarter, which had already pushed the odds above even. The RBNZ's own rate track, published on September 2, pointed to a pause in October and a hike in December. New Zealand's third-quarter Consumer Price Index (CPI) lands on October 21, one week before the decision, and the general election follows on November 7. The RBNZ gets a week with the inflation number and voters get ten days with the RBNZ's decision.
A hike alone won't lift the Kiwi if the Fed moves on the same day. The Fed announces about 17 hours after the RBNZ, and futures lean toward a quarter-point increase from 3.75%-4.00%, which would leave the gap between the two central banks exactly where it is. Swaps put the OCR near 4% at the end of the cycle, still below where the Fed's range sits now, which is why the Kiwi has kept falling while the RBNZ pricing climbed.
US numbers will do more work than New Zealand's before Friday
New Zealand's August building permits come out on Wednesday at 21:45 GMT after a -4.3% fall in July, and ANZ-Roy Morgan consumer confidence follows on Thursday at 21:00 GMT, previously 98. Neither is likely to shift an October hike that markets already rate at four-in-five.
The Kiwi's chance at relief is in the US data. Core Personal Consumption Expenditures (PCE) inflation is forecast at 3.4% YoY on Wednesday, the Institute for Supply Management (ISM) manufacturing survey at 54.9 on Thursday, and September payrolls at 84K on Friday against 162K in August. It's possible a weak jobs count talks the Fed out of October, though the inflation forecast two days earlier points the other way.
Levels to watch into Friday's payrolls
Resistance: 0.5700 has capped every session since the September 23 break, Monday included. Above that, 0.5750 is where the September 22 rebound stopped.
Support: 0.5650 held on Thursday, Friday and Monday. Beneath 0.5650, the late-June low just above 0.5600 is the only stop before 0.5550.
Bias: Short below 0.5700, targeting 0.5600 and then 0.5550. The daily Stochastic Relative Strength Index (Stoch RSI) reading has stayed in single digits since mid-September, so the lean allows for a bounce toward 0.5700 without changing. A daily close above 0.5750 cancels it.
NZD/USD daily chart
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
You may also like
Wall Street giants collectively raise rate hike forecasts, US Treasury futures continue to fall, gold drops over 1% to break 4000
After the US October CPI exceeded expectations, Goldman Sachs and Nomura added a forecast for an interest rate hike in March next year, while Deutsche Bank included a forecast for a rate hike in January next year. Currently, the market has fully priced in a 25 basis point rate hike in December, with a 13% probability for a 50 basis point hike. On Wednesday, the US Treasury spot market was closed, but Treasury futures continued to fall, with corresponding yields rising by about 2 to 4 basis points, and spot gold came under pressure, dropping by 1.1%.
No Need to Worry About the Cooling Down of AI Data Center Construction? The US Import Boom Is Unlikely to Subside in the Short Term, Real Impact May Come in 2029
It takes an average of 4.8 years from finalizing investment to starting construction of a data center project, and an additional 2.6 years from construction start to becoming operational. Servers usually cannot be installed until after the building structure and racks are completed. For trade partners such as Taiwan (China), South Korea, and Mexico who rely on US data center supply chain demand, the inertia in construction timelines provides at least a one- to two-year buffer for future exports.
Federal Reserve Major Debate: When Should the Tenure of “Number Three” Williams End?
The main point of contention is whether Williams should step down in June 2028, upon completing a full 10-year term, or in June 2027, when he reaches the mandatory retirement age of 65. Analysts point out that the Federal Reserve Board holds ultimate discretion; if he leaves early, Fed Chair Waller would be able to assert greater control over the appointment to this critical position. However, forcing Williams to shorten his term could easily be interpreted as political manipulation. Williams himself is expected to serve until June 2028.
Crypto prices
More
