As the US dollar declines due to a changing Fed policy stance, NZD/USD increases.
If future inflation statistics are steady, Fed Governor Waller supported maintaining interest rates at their current level in September.
Earlier this week, the RBNZ raised interest rates for the second time in a row.
For the second day in a row, NZD/USD is up, trading at about 0.5900 on Friday during Asian time. As the US dollar (USD) falters due to waning hawkish expectations on the Federal Reserve's (Fed) monetary policy trajectory, the pair gains value. In the event that future inflation data provide no significant surprises, Fed Governor Christopher Waller recently indicated that he would prefer to keep interest rates unchanged at the September meeting.
The aggressive comments made by Chairman Kevin Warsh a week prior stand in stark contrast to Fed Waller's dovish stance. Market pricing changed significantly after Waller's remarks, with the CME FedWatch tool indicating that the likelihood of a September rate hike dropped to 50.4% from 63.2% the day before.
In search of more precise signals on the Fed's future actions, traders are now focusing on the US August employment report. Nonfarm payrolls are forecast to grow by 56,000 jobs, according to consensus projections, while the national unemployment rate is predicted to remain stable at 4.1%.
Earlier this week, the Reserve Bank of New Zealand (RBNZ) raised interest rates for the second time in a row. The central bank did, however, indicate that future monetary tightening would be less forceful.
A mixed picture for New Zealand is supported by the trade revival.
Geoff Yu of BNY notes that June-quarter foreign trade data showed "two-way trade climbing 16% y/y to NZ$64.9bn," indicating that New Zealand's external accounts are exhibiting a strong comeback in activity. This improvement was widespread, according to BNY, with "total exports of goods and services rising to NZ$32.5bn from NZ$28.5bn a year earlier, while imports jumped to NZ$32.4bn from NZ$27.5bn." Yu presents these numbers as proof of strong trade flows that counteract weaker commodity prices and softer merchandise terms of trade, making the overall picture for the Kiwi more complex than headline growth may imply.
Policymakers are more likely to delay the next rate increase until December, according to RBNZ Assistant Governor Karen Silk, highlighting the central bank's flexibility and lack of a set course. While investors have nearly fully factored in a December rate hike, financial markets now show a modest 31% probability of an October rate hike.
If future inflation statistics are steady, Fed Governor Waller supported maintaining interest rates at their current level in September.
Earlier this week, the RBNZ raised interest rates for the second time in a row.
For the second day in a row, NZD/USD is up, trading at about 0.5900 on Friday during Asian time. As the US dollar (USD) falters due to waning hawkish expectations on the Federal Reserve's (Fed) monetary policy trajectory, the pair gains value. In the event that future inflation data provide no significant surprises, Fed Governor Christopher Waller recently indicated that he would prefer to keep interest rates unchanged at the September meeting.
The aggressive comments made by Chairman Kevin Warsh a week prior stand in stark contrast to Fed Waller's dovish stance. Market pricing changed significantly after Waller's remarks, with the CME FedWatch tool indicating that the likelihood of a September rate hike dropped to 50.4% from 63.2% the day before.
In search of more precise signals on the Fed's future actions, traders are now focusing on the US August employment report. Nonfarm payrolls are forecast to grow by 56,000 jobs, according to consensus projections, while the national unemployment rate is predicted to remain stable at 4.1%.
Earlier this week, the Reserve Bank of New Zealand (RBNZ) raised interest rates for the second time in a row. The central bank did, however, indicate that future monetary tightening would be less forceful.
A mixed picture for New Zealand is supported by the trade revival.
Geoff Yu of BNY notes that June-quarter foreign trade data showed "two-way trade climbing 16% y/y to NZ$64.9bn," indicating that New Zealand's external accounts are exhibiting a strong comeback in activity. This improvement was widespread, according to BNY, with "total exports of goods and services rising to NZ$32.5bn from NZ$28.5bn a year earlier, while imports jumped to NZ$32.4bn from NZ$27.5bn." Yu presents these numbers as proof of strong trade flows that counteract weaker commodity prices and softer merchandise terms of trade, making the overall picture for the Kiwi more complex than headline growth may imply.
Policymakers are more likely to delay the next rate increase until December, according to RBNZ Assistant Governor Karen Silk, highlighting the central bank's flexibility and lack of a set course. While investors have nearly fully factored in a December rate hike, financial markets now show a modest 31% probability of an October rate hike.
