Skip to content NZDUSD Fundamental Analysis – 6-August-2024
The New Zealand dollar declined to approximately $0.592 (NZD/USD) as the US dollar rebounded, driven by improving sentiment around the US economy and a substantial unwinding of yen carry trades.
Earlier in the week, fears of a looming recession in the US rattled investors, prompting them to factor in more significant rate cuts from the Federal Reserve. This reaction reflects a broader concern about the health of the US economy and its potential impact on global financial markets.
In response to these developments, investors and some economists in New Zealand are now expecting the Reserve Bank to begin reducing interest rates next week.
This expectation shift aligns with a global trend where markets increasingly bet on imminent monetary policy easing by central banks. Anticipating rate cuts in New Zealand is part of a broader strategy to stimulate economic activity and counteract potential slowdowns.
- Also read: AUDUSD Fundamental Analysis – 6-August-2024
BNZ, a significant financial institution, forecasted that the central bank would lower the official cash rate by 25 basis points to 5.25% during its meeting on August 14th. This expected move is seen as the first step in a series of rate reductions, with two additional cuts projected to bring the rate down to 4.75% by the end of the year.
These actions aim to support the New Zealand economy amidst growing global uncertainties and maintain financial stability.
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