The Reserve Bank of New Zealand (RBNZ) just delivered a mega rate hike today!
Will NZD bulls stick around long enough to push NZD/USD higher in the next trading sessions?
Before moving on, ICYMI, yesterday’s watchlist checked out a Fibonacci retracement opportunity on EUR/USD ahead of several FOMC member speeches. Be sure to check out if it’s still a valid play!
And now for the headlines that rocked the markets in the last trading sessions:
Fresh Market Headlines & Economic Data:
US crude oil inventories down by another 4.2 million barrels for the week ending Nov 18 vs. 5.8 million barrels decrease the previous week and 2.2 million barrel draw expected
Japan’s markets out on bank holiday
Australia’s manufacturing PMI drops from 52.7 to 51.5 in November
RBNZ raised interest rates by 75 basis points to 4.25%, marking the biggest increase on record and the highest rates since 2008RBNZ expects terminal rate at 5.5% by mid-2023 vs. August forecast of 4.1% terminal rate
RBNZ expects inflation to rise to 7.5% by end of March 2023 before dropping to its 1% – 3% target by September 2024
RBNZ expects four consecutive quarters or negative growth starting Q2 2023
EU releases ‘symbolic’ gas and preliminary oil cap price numbers
Oil prices edge higher as large U.S. crude stock drop outweighs China demand worries
European shares little-changed ahead of PMIs, Fed Minutes
France’s factory activity contracts at a softer pace (from 47.2 to 49.1), services sector unexpectedly contracts (from 51.7 to 49.4) in November
Germany’s manufacturing PMI above forecasts at 46.7 (vs. 45.0 expected) while services PMI slightly dips from 46.5 to 46.4 in November
Upcoming Potential Catalysts on the Forex Economic Calendar:
Eurozone’s manufacturing and services PMIs at 9:00 am GMT
U.K.’s manufacturing and services PMIs at 9:30 am GMT
U.S. initial jobless claims at 1:30 pm GMT
U.S. core durable goods orders at 1:30 pm GMT
U.S. manufacturing and services PMIs at 2:45 pm GMT
U.S. new home sales at 3:00 pm GMT
FOMC meeting minutes at 7:00 pm GMT
Use our new Currency Heat Map to quickly see a visual overview of the forex market’s price action! 🔥 🗺️
What to Watch: NZD/USD
Recession who? In case you missed it, RBNZ delivered a 75 bps interest rate hike earlier today, which is the biggest rate hike on RBNZ’s record.
The central bank also warned about unemployment rising again; inflation peaking at a higher rate; the “peak” interest rate being higher than earlier forecast, and economic growth coming in negative for FOUR consecutive quarters in 2023.But that’s a problem for next year.
For now, NZD bulls are enjoying an upside surprise in RBNZ’s interest rates.
NZD/USD, which was already being propped up by the 1-hour chart’s 100 SMA and mid-range support, jumped back up to the .6200 psychological handle and range resistance zone.
Will we see an upside breakout today?
All eyes will be on the FOMC meeting minutes for clues on how hawkish Fed members are even as they plan to slow down their interest rate hikes.
Hints of pivoting could weigh on USD and bust NZD/USD above its week-long range. The .6270 is a good are of interest to target though you can also aim for the .6325 previous inflection point.
On the other hand, talks of even higher interest rates or keeping interest rates higher for longer could renew USD demand.
NZD/USD’s range resistance could hold for another day and drag the pair back to its mid-range or range support levels.