NZD

NZD/USD rises despite soft jobs data, with risk of mega RBNZ cut remaining on the table. US Congress composition now key to near-term Kiwi moves.

While that keeps the prospect of a near-term rate cut from the Reserve Bank of New Zealand on the table should inflationary pressures suddenly subside, for now, movements in NZD/USD continue to be dictated by sentiment on what the Federal Reserve may do with US interest rates in the months ahead.

New Zealand’s unemployment rate jumps more than expected despite a collapse in labour force participation, putting the Reserve Bank of New Zealand closer to cutting interest rates before the US Federal Reserve. NZD/USD fell sharply while AUD/NZD rose to new cycle highs.

New Zealand inflationary pressures continued to ease in the March quarter, although domestic prices remained uncomfortably sticky, likely keeping the prospect of rate cuts from the Reserve Bank of New Zealand a distant prospect.

Inflation remains key sticking point preventing interest rate cuts from the Reserve Bank of New Zealand, ensuring Wednesday’s first quarter consumer price inflation report will be closely watched by financial markets, especially should it print on the softer side of expectations.

While it may be one of the smallest G10 FX central banks, what the Reserve Bank of New Zealand (RBNZ) lacks in size it more than makes up for in terms of market punch, often sparking major moves in the New Zealand dollar under the leadership of Governor Adrian ‘Shock and’ Orr. Wednesday's interest rate decision may be no exception.

Having surged Friday on the back of a forecast from ANZ looking for an additional two hikes from the RBNZ, the NZD/USD has now given back those gains back following the latest RBNZ inflation expectation survey. What one hawkish forecaster giveth, 38 dovish forecasters have taketh away.

A late flurry of buying after New Zealand’s jobs report sent NZD/USD to the top of the G10 FX leaderboard on Tuesday, leaving in on track for another retest of the downtrend it’s been stuck in throughout the entirety of 2024.

Last week, AUD shorts were culled at their fastest pace since March 2020, when eye watering levels of stimulus was rolled out at their height of the pandemic.

Gold is clearly back in fashion thanks to the combination of forthcoming Fed hikes and the Ukraine crisis, with futures markets within easy reach of a record high.

As the data was compiled ahead of the FOMC meeting its likely there are some distortions in this week’s speculative positioning report.

Kiwi bulls appeared spooked last week as we saw gross longs closed at their second fastest rate on record.

Lower trading volumes due to Thanksgiving in the US made for a quiet session overnight, but that didn’t prevent the AUD/CAD cross making a ‘break’ for it.

The Kiwi dollar continues to go from strength to strength, as traders anticipate at least one more 25 bps hike at their meeting later this month.

Whilst net exposure to US 10-year treasury notes were at their most bearish level since the Pandemic began, CFTC data shows it is a function of longs covering.

NZD is the currency of New Zealand and is involved in some significant forex pairs. Discover everything you should know about NZD before you open a position.

A volatile candle seen during yesterday’s session has us on guard for a potential bullish breakout on the S&P 500 futures market today.