NZD/USD Clings to Recovery Above 0.5900 Amid US Dollar Correction
The NZD/USD pair is holding on to gains above the key support level of 0.5900 in the European session on Friday. This upward movement is primarily driven by the correction in the US Dollar. The US Dollar Index (DXY) has dipped below the crucial support level of 106.00, hitting a fresh two-week low near 105.60. Despite a slight recovery, the USD is set to close the week with a 1.5% decline.
Market Sentiment
- Investors are adjusting their positions on the US Dollar following the nomination of Scott Bessent as Treasury Secretary by President-elect Donald Trump. This move is seen as a step towards executing trade policies strategically to prevent a trade war.
- Focus is now on upcoming US employment-related economic indicators and the ISM Manufacturing and Services PMI data for November, which will be released next week. This data will impact market expectations regarding the Fed’s monetary policy decision in December.
RBNZ’s Recent Decision
- This week, the Reserve Bank of New Zealand (RBNZ) cut interest rates by 50 basis points to 4.25%. Despite this, the New Zealand Dollar (NZD) remains strong.
- RBNZ Governor Adrian Orr has left the possibility of a further interest rate cut open, depending on economic conditions. He expressed confidence in the decline of inflationary pressures.
Economic Indicator: RBNZ Interest Rate Decision
The Reserve Bank of New Zealand announces its interest rate decision after its scheduled policy meetings. If the RBNZ anticipates rising inflation, it may raise the Official Cash Rate (OCR) to curb inflation, which would be positive for the NZD. Conversely, if inflation is low, the RBNZ may lower the OCR, weakening the NZD.
Last Release: Wed Nov 27, 2024 01:00
Actual Rate: 4.25%
Consensus: 4.25%
Previous Rate: 4.75%
For more information, visit the Reserve Bank of New Zealand website.
Analysis
The dynamics between the NZD/USD pair and the US Dollar reflect the current market sentiment and economic indicators. The correction in the US Dollar is providing support to the Kiwi currency, despite expectations of further rate cuts by the RBNZ.
Investors and traders should closely monitor upcoming US economic data releases and the RBNZ’s future policy decisions to gauge the direction of these currency pairs. The interplay between central bank actions, economic data, and market sentiment will continue to shape the movements in the forex market.