Skip to content NZDUSD Fundamental Analysis – 3-June-2024
The New Zealand dollar is steady at around $0.613 (NZD/USD) during light holiday trading as investors assess global monetary policies. Recently, the Kiwi reached its highest point in over two months. This surge happened because the US dollar weakened after US PCE inflation data for April met expectations.
This development suggests the Federal Reserve might lower interest rates later this year.
High Interest Rates Strengthen Kiwi
In New Zealand, the Kiwi remains strong partly due to the country’s relatively high interest rates, even though the economy is slowing down. Last month, the Reserve Bank of New Zealand (RBNZ) surprised many by maintaining a hawkish stance in its meeting, hinting at a potential rate hike. The central bank also adjusted its official cash rate forecast, suggesting more monetary tightening might be on the horizon.
However, RBNZ Governor Adrian Orr recently indicated that the chances of another rate hike are low, provided inflation expectations remain stable. This balanced approach aims to support the economy while keeping inflation in check.
Conclusion
Understanding these factors can help investors make informed decisions. Monitoring both domestic and international economic indicators is crucial for navigating the current financial landscape.
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