NZD USD

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.

The Kiwi dollar is pushing higher, potentially reflecting no escalation in dovish rhetoric from the RBNZ despite New Zealand sitting in a double-dip recession. It has an inflation mandate and inflation remains too high to justify lowering rates yet.

1-day implied volatility levels for USD/JPY, EUR/USD and NZD/USD have blown out ahead of today’s key events, which includes comments from BOJ’s governor, and RBNZ cash rate decision and the US inflation report.

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.

Traders remained net-long US dollar index futures last week, although asset managers have the more convincing bullish view for the dollar.

Some FX pairs like to gravitate towards big figures but not the NZD/USD. It’s clearly a fan of doing things in half big figure increment, proving plenty of opportunities to build trades around.

NZD/USD and AUD/USD were the strongest pairs on Monday during quiet trade, but the USD shows the potential to bounce before a larger move lower, which could eventually allow AUD/USD to reach for 66c.

As a high beta play on the global economy, the NZD/USD may be signaling downside risks are growing in other cyclical assets.

The US dollar failed to dominate the FX space despite stronger-than-expected inflation data. And with AUD/USD and NZD/USD holding key support levels, we see the potential for a move higher over the near-term unless the wheels fall off sentiment.

Whilst the RBNZ were expected to hold, their statement struck a hawkish tone by stating that “inflation remains too high”. And with traders front-loading a weak CPI print for the US later this week it has catapulted the New Zealand dollar higher.

Retail spending in New Zealand was unchanged in the September quarter after accounting for price movements, an improvement on the 1% drop reported in the prior three-month period than was a tenth larger than originally reported.

NZD/USD is falling in the wake of a soft New Zealand employment report, reinforcing the view that when the RBNZ next moves interest rates, it’s far more likely to be a cut than hike.

These are the most volatile FX pairs in 2023. Learn how to trade them and use volatility to your advantage.

New Zealand inflationary pressures moderated-more-than expected in the September quarter, taking the wind out of the NZD/USD’s sails following the expected election victory from the National Party-led coalition over the weekend.

Welcome to Technical Tuesday, a weekly report where we highlight some of the most interesting markets that will hopefully appease technical analysts and traders alike. In this week’s report, we are getting technical on the AUD/USD and NZD/USD, as well as WTI crude oil, as traders await key data in the second half of the week.

NZD pairs were lower after the RBNZ hiked for a 12th consecutive meeting and signalled they may have reached a peak rate of 5.5%. At least for now.