NZDUSD Fundamental Analysis – May-28-2024

NZD/USD—The New Zealand dollar recently climbed above $0.614, reaching its highest level in eleven weeks. This surge is primarily due to a softer US dollar, but the Kiwi also benefits from the Reserve Bank of New Zealand’s (RBNZ) strong stance.

NZDUSD Fundamental Analysis – May-28-2024

The RBNZ’s recent decision to maintain its cash rate at a 15-year high of 5.5% for the seventh consecutive time has been a critical factor in supporting the Kiwi dollar. The central bank has raised its forecast for peak rates and delayed the timing for a rate cut. This decision signals the RBNZ’s commitment to controlling inflation.

Inflation Targets and Future Rate Hikes

RBNZ Governor Adrian Orr indicated that the central bank does not plan another interest rate hike unless necessary to manage inflation expectations. This stance helps stabilize the market by reducing uncertainty about future monetary policy moves.

Deputy Governor’s Remarks on Rate Cuts

Deputy Governor Christian Hawkesby reinforced this sentiment by stating that cutting interest rates is not part of the near-term discussion. This clear message further supports the New Zealand dollar by assuring investors of a steady policy approach.

Upcoming US Inflation Data

Looking ahead, forex traders are focusing on Friday’s US PCE inflation data, the Federal Reserve’s preferred measure of inflation. This data will provide further cues on when the Fed might ease its policy rates, influencing the broader forex market.

By staying informed about these key economic indicators and central bank decisions, traders can make better-informed decisions in the dynamic forex market. (Source Bloomberg)

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