NZDUSD Analysis: December 29, 2023

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Reuters – The New Zealand dollar experienced a steady trend, hovering around $0.635 as the year draws to a close. This steadiness belies a year filled with pressures, mainly due to the US Federal Reserve’s assertive rate hikes. A significant turn came towards the year’s end, with the Kiwi rallying on expectations that the Fed might reduce rates early next year. This crucial point in our NZDUSD analysis reflects a key market shift.

NZDUSD Analysis: A Fundamental View

The prospect of cooling US inflation has led traders to expect a rate cut by the Federal Reserve, potentially as early as next March. This anticipation has placed the US dollar under pressure while elevating the New Zealand dollar to its highest point in over five months. These changes are pivotal in understanding the NZDUSD dynamics.

NZDUSD Analysis

NZDUSD Analysis | 4-Hour Chart

Domestically, New Zealand’s central bank chief acknowledged the unexpected dip in recent growth figures. This has fueled speculation about an early cut in the cash rate. Current market bets suggest the Reserve Bank of New Zealand could lower rates as soon as May. This is despite previous hints of a possible rate hike to combat persistent inflation. The RBNZ’s decision last month to maintain the cash rate at 5.5%, narrowly avoiding an increase, adds another layer to the NZDUSD analysis.

This concise overview offers insights into the factors shaping the NZDUSD pair, highlighting the influences of global and domestic policies on the currency market.