NZD/USD jumps to 0.5900 as investors see RBNZ pivoting to rate cuts later than expected

Source Fxstreet
Apr 17, 2024 10:50
  • NZD/USD moves higher to 0.5900 as traders see the RBNZ reducing key interest rates from November.
  • NZ Q1 inflation grew by 0.6% as expected.
  • Fed Powell returns to the “higher for longer interest rates” argument.

The NZD/USD pair extends its recovery to the round-level resistance of 0.5900 in Wednesday’s European session. The Kiwi asset strengthens as traders repriced bets supporting rate cuts by the Reserve Bank of New Zealand (RBNZ).

Investors now see the RBNZ beginning to lower borrowing rates from the November meeting instead of the October meeting. Market expectations for the RBNZ starting to reduce its Official Cash Rate (OCR) have been significantly influenced by the expected rise in New Zealand’s Q1 Consumer Price Index (CPI) data released in Wednesday’s early Asian session.

Stats NZ showed that NZ inflation rose by 0.6% as expected, higher from 0.5% growth recorded in the last quarter of 2023. The annual inflation data decelerated to 4.0% against the prior reading of 4.7%. Currently, the RBNZ has been maintaining its Official Cash Rate (OCR) at 5.5%.

A sharp improvement in market sentiment has also boosted demand for the New Zealand Dollar. S&P 500 futures have posted significant gains in the European session. 10-year US Treasury yields have dropped slightly to 4.64%. The rally in the US Dollar Index (DXY) seems stalled near 106.40 as investors had priced in that the Federal Reserve (Fed) will lean towards keeping interest rates higher for a longer period.

On Tuesday, Fed Chair Jerome Powell said, “The recent data have clearly not given us greater confidence, and instead indicate that it’s likely to take longer than expected to achieve that confidence” reported Reuters. In this statement, the recent data is hot consumer price inflation data for March.

Currently, financial markets are anticipating that the Fed will start reducing interest rates from the September meeting.

NZD/USD

Overview
Today last price 0.5909
Today Daily Change 0.0029
Today Daily Change % 0.49
Today daily open 0.588
 
Trends
Daily SMA20 0.5993
Daily SMA50 0.6075
Daily SMA100 0.6132
Daily SMA200 0.6062
 
Levels
Previous Daily High 0.5908
Previous Daily Low 0.5868
Previous Weekly High 0.6079
Previous Weekly Low 0.5933
Previous Monthly High 0.6218
Previous Monthly Low 0.5956
Daily Fibonacci 38.2% 0.5884
Daily Fibonacci 61.8% 0.5893
Daily Pivot Point S1 0.5863
Daily Pivot Point S2 0.5846
Daily Pivot Point S3 0.5823
Daily Pivot Point R1 0.5902
Daily Pivot Point R2 0.5925
Daily Pivot Point R3 0.5942

 

 

Disclaimer: For information purposes only. Past performance is not indicative of future results.
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