NZDUSD Analysis – December 18, 2023

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NZDUSD Analysis – The New Zealand dollar has recently seen a notable rise, surpassing the $0.62 mark, marking its strongest position since last July. This upward trend comes as the US dollar experiences a decline, influenced by the Federal Reserve’s latest dovish approach. Despite expectations, the US central bank decided to maintain its interest rates. However, the Fed’s “dot plot” suggests that we might witness three rate reductions in the coming year.

On the home front, New Zealand’s financial community is keenly observing the Reserve Bank of New Zealand’s (RBNZ) monetary strategies. Recent data hint that the inflation rate in the fourth quarter might be slowing down more than previously anticipated. This development challenges the earlier belief that the RBNZ would need to increase interest rates further. Specifically, statistics reveal a decrease in New Zealand’s food prices, which constitute 19% of the consumer price index. These prices dropped to 6% in November, down from 6.3% in October, reaching their lowest since January 2022. As a result, economic experts are adjusting their inflation projections for the fourth quarter downward.

NZDUSD Analysis

NZDUSD Analysis – Daily Chart

In the previous month, the RBNZ maintained the cash rate at 5.5%. Yet, they cautioned that an additional rate hike might be required if inflation remains persistent.