RBNZ Done Easing
The Kiwi Dollar is soaring today on the back of a hawkish shift from the RBNZ overnight. Despite cutting rates by a further .25%, the bank signalled that it was done with the current easing cycle. The updated forecasts from the central bank included no projected rate cuts through 2026 with one member voting against a cut this time around. This signal was clearly a huge blow for doves who were looking for further easing, with some even expecting a larger rate cut this stime around. NZDUSD is now up around 1.4% on the day and could see further upside if USD data this afternoon undershoots forecasts.
RBNZ/Fed Divergence
While NZD sentiment has shifted higher in line with hawkish signalling from the RBNZ, at the same time, USD sentiment has shifted lower in line with traders’ dovish repricing of the Fed rates outlook. Mixed NFP data last week, along with some dovish commentary from Fed’s Williams last week sparked a jump in pricing for a December cut. Easing expectations continued to rise this week, felled by softer-than-forecast US PPI and retail sales data yesterday. With pricing for a cut now around 855 from below 40% at the start of last week. With clear divergence between the Fed and the RBNZ, the kiwi stands to gain further if we see a proper USD decline start to materialise ahead of the December FOMC.
Technical Views
NZDUSD
NZDUSD is rallying off lows but has stalled for now into a retest of the broken bear channel lows and the .5696 level. While this area holds as resistance, risks of a fresh push lower are seen with .5560 the next support to watch. If price break higher, however, we could see a sharp rally back up towards the .5853 level and bear channel highs.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.