Skip to content NZDUSD Fundamental Analysis – 12-September-2024
The New Zealand dollar recently rose to approximately $0.614 (NZD/USD), benefiting from a more optimistic market mood. This followed a mixed report on US consumer inflation, strengthening beliefs that the Federal Reserve might opt for a more minor rate cut in its upcoming meeting.
While the data showed that August’s overall US Consumer Price Index (CPI) increased as expected, core inflation was slightly higher than predicted.
New Zealand’s Central Bank Eases Interest Rates
In August, New Zealand’s Reserve Bank took its first step toward lowering interest rates in over four years by reducing the rate by 25 basis points. Analysts are now predicting further cuts during the central bank’s last two meetings of the year.
One of these could potentially be a larger-than-usual 50-basis-point cut, indicating that the central bank is preparing to take more decisive action if necessary.
Cash Rate Projections and Economic Outlook
According to market predictions, the cash rate in New Zealand, currently at 5.25%, is expected to gradually drop to 3.0% by the end of next year.
As for other economic data, New Zealand’s yearly food inflation slightly decreased to 0.4% in August, down from 0.6% in July, showing a mild improvement in price stability.
Conclusion: Positive Prospects for the New Zealand Dollar
In summary, the New Zealand dollar is seeing gains as domestic and global factors suggest a favorable outlook. With the Reserve Bank committed to reducing interest rates and inflation showing signs of easing, the country’s currency could continue to strengthen in the months ahead.
However, global economic shifts, such as decisions made by the Federal Reserve, will play a key role in shaping future trends.
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