30.01.2023 11:50 PM
NZD/USD: ahead of 3 central bank meetings

This image is no longer relevant

Statistics New Zealand reported last week that the Consumer Price Index rose 1.4% in Q4, beating expectations of a 1.3% increase. On an annual basis, CPI remained at 7.2%, also beating expectations of annual inflation of 7.1%.

According to the Reserve Bank of New Zealand's so-called sector factor model, annual inflation accelerated to 5.8% in Q4 from 5.6% in Q3.

The data suggests that despite the actions already taken, the RBNZ is failing to bring inflation risks under control, and this is putting pressure on the bank to tighten its monetary policy further. Market participants are expecting the central bank to take more decisive steps towards further monetary tightening.

Considering the good state of the New Zealand economy and the labor market, investors expect that the RBNZ will raise the interest rate at the meeting on February 22, which is already one of the highest among the key global central banks, currently at 4.25%.

However, this meeting will not take place until the end of February. Furthermore, three key global central banks (USA, UK, and eurozone) are set to hold their own monetary policy meetings this week.

The Federal Reserve will be the first among these central banks to announce its decision. This will be on Wednesday at 19:00 (GMT). The Fed is widely expected to raise interest rates again, but not by 75bp, or 50bp as it did in 2022, but by 25bp (to 4.75%) and may announce plans to raise it further, but at an even slower pace. Dollar bulls are waiting for the U.S. central bank to continue its monetary tightening cycle. However, it is still not clear what will happen after this Fed meeting.

Meanwhile, the current behavior of the US dollar and the whole financial market shows that participants refrain from being active, as they brace for the important economic events of the week - monetary policy decisions of the central banks in the USA, the UK and the eurozone.

Thus, the DXY dollar index was slightly down at the beginning of Monday's European session after a similar moderate growth during Monday's Asian session. The DXY futures were trading near 101.60, 12 points below Friday's closing price but 34 points above last week's local 9-month low of 101.26.

On the whole, the dollar and its index remains continues to move down, which makes short positions on DXY (CFD #USDX in the MT4 trading terminal) preferable. After crossing the support level of 101.00, you can use key support levels like 100.00, 98.60 for succeeding bearish targets.

This image is no longer relevant

As for the New Zealand dollar, it maintains positive values. The pair is running on bullish momentum, fueled by a tough stance of the RBNZ on the issue of monetary policy and positive macro data coming from New Zealand, especially with regard to the country's labor market and GDP. For instance, data released in the middle of last month indicated that the country's Q3 GDP grew +2.0%, higher than the forecast of +0.9% growth and the previous value of +1.7%. On an annual basis, New Zealand's economy added +6.4%, which was better than the +5.5% expected.

Fresh labor market data will be released on Tuesday and might add some positive momentum to the NZD and the NZD/USD pair. The NZD/USD might also see growth in the employment report from Statistics New Zealand and unemployment in Q4 remaining at a low of 3.3% (previous reading: 3.3%, 3.3%, 3.2%, 3.3%).

This image is no longer relevant

The NZD and the NZD/USD pair also receives support from positive investor sentiment about the Chinese economy, where the Chinese authorities (late last year) began to move away from the "zero-Covid" policy, and the Chinese Center for Disease Control and Prevention recently noted that the current wave of COVID-19 infections is coming to an end. This should have a positive effect on the growth of the Chinese economy and business activity in that country, which is New Zealand's largest trading partner.

The pair was trading near 0.6482, in the middle-term bull market zone, above the key support levels of 0.6340, 0.6285 and 0.6260.

Jurij Tolin,
Analytical expert of InstaForex
© 2007-2023
New Zealand Dollar vs US Dollar
Select timeframe
Start trade
Start trade
  • Grand Choice
    Contest by
    InstaForex always strives to help you
    fulfill your biggest dreams.
  • Chancy Deposit
    Deposit your account with $3,000 and get $8000 more!
    In March we raffle $8000 within the Chancy Deposit campaign!
    Get a chance to win by depositing $3,000 to a trading account. Having fulfilled this condition, you become a campaign participant.
  • Trade Wise, Win Device
    Top up your account with at least $500, sign up for the contest, and get a chance to win mobile devices.
  • 100% Bonus
    Your unique opportunity to get a 100% bonus on your deposit
  • 55% Bonus
    Apply for a 55% bonus on your every deposit
  • 30% Bonus
    Receive a 30% bonus every time you top up your account

Recommended Stories

XAU/USD: After testing 2000.00, what's next?

The absolute focus of investors' attention today is the Fed meeting and the publication (at 18:00 GMT) of its decision on the interest rate. The level of interest rates

Jurij Tolin 13:24 2023-03-22 UTC+2

USD/CAD slides down

The Canadian dollar weakened against its U.S. counterpart on Tuesday as domestic inflation data supported the recent decision by the Bank of Canada to suspend interest rate hikes. Canada's annual

Irina Yanina 10:57 2023-03-22 UTC+2

Gold is losing ground

The higher you climb, the harder you fall. The week to March 17 was the best for gold since the beginning of spring 2020. Like then, there were serious shocks

Marek Petkovich 10:35 2023-03-22 UTC+2

Janet Yellen's speech was to prepare markets for the Fed's monetary policy decisions

Yesterday's speech by US Treasury Secretary Janet Yellen was clearly to prepare markets and investors who are now in disarray for the decision of the Fed. She said

Jakub Novak 10:26 2023-03-22 UTC+2

Markets await the Fed's decision on monetary policy

Markets await how the Fed plans to deal with high inflation and the current banking sector crisis. Most believe that Chairman Jerome Powell will try to balance

Jakub Novak 09:54 2023-03-22 UTC+2

Banking crisis postponed, risk demand ahead of FOMC meeting rises. Overview of USD, NZD, AUD

After a rather severe shock, caused by the bankruptcy of SVB, the fall of the banking sector as a whole and investors' flight from Credit Suisse, which

Kuvat Raharjo 22:47 2023-03-21 UTC+2

Isn't the problem with the dollar the Fed?

Over the past few days, the euro and the pound have been rising rapidly against the dollar. If at some point we could conclude that the whole point lies

Chin Zhao 22:47 2023-03-21 UTC+2

Preview of the March Fed meeting

The US Federal Reserve will announce the outcomes of its most recent meeting in March on Wednesday, March 22. It is important to note that market participants' forecasts

Irina Manzenko 18:46 2023-03-21 UTC+2

EURUSD trades higher amid improving global risk appetite and return of ECB's resoluteness

The markets are acting as if the banking crisis is over. They enthusiastically welcomed the acquisition of Credit Suisse by its rival UBS and the bailout of big lenders

Marek Petkovich 15:10 2023-03-21 UTC+2

USD/JPY: Yen retreated, preparing to jump

It is hard to find a Forex currency that has benefited more from the banking crisis than the yen. While its main competitors in the status of safe-haven assets—the U.S

Marek Petkovich 14:15 2023-03-21 UTC+2
提出您的问题,用 在线帮助.