Next Tuesday, the RBNZ will announce their new official bank rate which is expected to be 3%, a 0.50% rise from July. This hike will make it the highest yielding major currency on the market. Here is why you should consider buying the kiwi before Tuesday's decision as well as some strong NZD long setups.
Preview of Policy Decisions
The Regional Bank of New Zealand has been very adamant about tackling inflammatory issues in their economy. So much so, that analysts have stated that rates will not only reach a certain level but stay there for an extended period of time.
It also appears that New Zealand's central bank is planning to stay the course with consistent 50 basis point runs in the future. GDP is still in decline, so the economy is experiencing contraction, but that does not seem to deter the RBNZ for now.
People do have more confidence in the bank's battle as surveys saw a decrease in inflation expectations from 3.29% to 3.07% in 2023.
Subduing inflation is a primary factor in the kiwi's strength. Commodity prices like gold, oil and agriculture have declined overall due to supply chain issues and geopolitical conflict. This has an affect on the economy, but it is secondary towards CPI.
Investors are now pricing in the kiwi's target as we come to an end of this trading week. Outlook is strong on this currency right now.
Kiwi-swiss jumped today on rate hike anticipation. Price formed a higher high on the 1D, but still needs to close above resistance to validate a breakout. Price has been on a relatively long downtrend since February of 2021. Because of this strong trend to the downside, it's hard to tell when sentiment will shift. But a break above resistance could take price higher towards 0.61700s.
NZDCAD is coming up to test a previous top after breaking above a falling trend line on the 1D timeframe. More resistance lies above around the 61.8% fib retracement level and another longer term falling trend line.
One of the hardest moves on the kiwi is EURNZD after price drops 0.79% already today. Price already broke under support and formed a lower low, but it still looks like there is room to run on the 1D timeframe. Strong downside momentum could take price all the way to test the lows around 1.56904.
Yesterday, the Federal Open Market Committee (FOMC), the Federal Reserve’s policy-making body, implemented yet another 75 basis point interest rate hike. While this move was perfectly in line with market forecasts, Chair Powell’s comments following the subsequent press conference, in which he discussed the FOMC’s new set of economic projections, were significant. He continued to […]
Statistics Canada released a surprising new batch of inflation data this morning: month-over-month CPI failed to meet market forecasts, declining by 0.3% instead of the anticipated 0.1%. Rather than being an outlier, the other measurements of CPI mostly followed suit, as both year-over-year Trimmed CPI and Median CPI likewise failed to meet expectations. Trimmed CPI’s […]
At 9:30 pm Eastern Time tonight, the Reserve Bank of Australia (RBA) will be publishing their latest round of monetary policy meeting minutes. While there is a chance that their intentions could come across as more hawkish than expected, they currently have little reason to be. Despite relatively low unemployment at 3.5%, steady GDP growth, […]
DISCLAIMER: All comments made by TraderNick’s Forex Group, LLC are for educational and informational purposes only. All comments should not be construed as investment advice regarding the purchase or sale of any securities or financial instrument of any kind. Please consult with your financial adviser before making an investment decision regarding any securities or financial instruments mentioned by TraderNick’s Forex Group, LLC. TraderNick’s Forex Group, LLC assumes no responsibility for your trading and investment results. All information on any of the platforms utilized by TraderNick’s Forex Group, LLC was obtained from sources believed to be reliable, but we do not warrant its completeness or accuracy, or warrant any results from the use of the information. TraderNick’s Forex Group, LLC, its employees, representatives, and affiliated individuals may have a position or effect transactions in the securities and financial instruments herein and or otherwise employ trading strategies that may be consistent or inconsistent with the provided strategies. Trading of any type involves very high risk and may not be suitable for all investors. TraderNick’s Forex Group, LLC, its subsidiaries and all affiliated individuals assume no responsibility for your trading and investment result. Read our full disclaimer here