NZD/USD Rises as RBNZ Hike Looms
The New Zealand Dollar firmed as markets positioned for another RBNZ rate hike, even with the U.S. Dollar supported by a hawkish Fed backdrop.
NZD/USD traded higher on Tuesday, gaining roughly 0.25% toward 0.5700 as markets looked ahead to Wednesday’s (Tuesday night US) RBNZ decision. The central bank is widely expected to raise the Official Cash Rate (OCR) by 25-bps to 3.00% after third-quarter inflation came in at 3.7%, still above the top of the 1%-3% target range. Core inflation remains sticky and energy costs are expected to push headline inflation higher again, keeping the RBNZ firmly in tightening mode despite soft domestic growth.
Elsewhere the U.S. Dollar remains supported ahead of Wednesday’s Fed decision, where policymakers are expected to hold rates at 3.75%-4.00% but preserve the option of another hike in December. That limits the upside for NZD/USD even with a near-certain RBNZ move already priced. The key issue tomorrow is guidance: a hike is expected, so the New Zealand Dollar needs a signal that additional tightening remains likely to extend today’s gains.
NZD/USD Daily Price History
NZD/USD has put together a respectable rebound from the 0.5585 floor, but it is now running directly into the first meaningful resistance zone around 0.5700. The New Zealand Dollar has reclaimed the fast moving averages and pushed back toward the 50-day, but the broader trend is still damaged. The 100-day and 200-day averages remain overhead around roughly 0.5760-0.5790, and both are still sloping lower. Until those levels are recovered, this is a countertrend rally inside a larger bearish, or at best, a choppy neutral, structure.
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