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In recent sessions, NZD/USD has posted an average variation of just under 0.4%, a relatively low level compared to moves above 1% seen in early February. This reflects the emergence of a consistent neutral bias in the pair’s short-term behavior.
Over the past five trading sessions, NZD/USD has shown a broad bearish bias, accumulating a decline of more than 1% as the Reserve Bank of New Zealand (RBNZ) prepares to announce its next policy decision. For now, the market expects additional rate cuts, which has limited the New Zealand dollar’s ability to regain strength against the U.S. dollar.
The NZD/USD pair has fallen more than 1% over the past four trading sessions, favoring the U.S. dollar over the New Zealand dollar. For now, the bearish bias remains intact as the market awaits the Reserve Bank of New Zealand’s (RBNZ) interest rate decision.
The major FX pairs further extended their losses earlier this morning, before rebounding to turn green on the day as North American participants slowly made their way to their trading stations.
With the US mid-term elections out of the way, investors’ focus will slowly return to global economics and away from US politics slightly.
As another volatile week is about to conclude, equity markets were coming under a bit of pressure and were giving back a big chunk of their gains from earlier in the week.
Falling in the awkward post-US, pre-Asian session, the Reserve Bank of New Zealand will deliver its quarterly monetary policy statement in just a few hours (21:00 GMT).
The Reserve Bank of Australia (RBA) will make its rate decision in the early hours of Tuesday, which makes the Aussie the main focal point during the Asian session.
The RBNZ is widely expected to keep interest rates unchanged at 1.75%. It last changed rates back in November 2016, when the benchmark Official Cash Rate (OCR) was trimmed from 2.0% to its current rate. Unless the RBNZ hints at a near future hike, the NZD/USD could extend its declines further.
The primary market themes for the past week have been weaker-than-expected inflation pressures, a surge in the energy sector due in part to a planned US withdrawal from the Iran nuclear deal, and a partial reduction in geopolitical risk concerns due to North Korea’s apparent display of cooperation in releasing hostages ahead of US/NK June talks.
As the US dollar took a bit of a breather on Wednesday after a prolonged, three-week rally, kiwi traders were positioning ahead of the Reserve Bank of New Zealand’s rate decision, monetary policy statement, and press conference, all scheduled for Thursday morning in Wellington (Wednesday evening in New York and London).
With the Federal Reserve decision and US monthly jobs report out of the way this past week, currency markets are looking next to two other key central banks that will be reporting their latest policy decisions in the week ahead – the Bank of England and the Reserve Bank of New Zealand.
The past week saw market volatility stabilize from previous weeks as both the US dollar and equity markets sought direction amid continuing concerns over the potential for a global trade war.
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