{"id":43737,"date":"2024-12-20T06:37:11","date_gmt":"2024-12-20T06:37:11","guid":{"rendered":"https:\/\/crowdfundjunction.com\/blog\/nzd-usd-analysis-amid-potential-fed-and-rbnz-divergence\/"},"modified":"2024-12-20T06:37:11","modified_gmt":"2024-12-20T06:37:11","slug":"nzd-usd-analysis-amid-potential-fed-and-rbnz-divergence","status":"publish","type":"post","link":"https:\/\/crowdfundjunction.com\/blog\/nzd-usd-analysis-amid-potential-fed-and-rbnz-divergence\/","title":{"rendered":"NZD\/USD analysis amid potential Fed and RBNZ divergence"},"content":{"rendered":"

(Originally posted on : Invezz )<\/b>
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The NZD\/USD exchange rate continued its freefall this week and reached its lowest level since 2022. The kiwi plunged to a low of 0.5600, down by about 12% from its highest level this year, after the latest New Zealand data.<\/p>\n

Hopes of more RBNZ cuts rise<\/h2>\n

The NZD\/USD pair has been in a strong bearish trend in the past few months as the US dollar index continued<\/a>.<\/p>\n

This sell-off accelerated this week as odds of more divergence between the Federal Reserve and the Reserve Bank of New Zealand (RBNZ) continued.<\/p>\n

The RBNZ delivered another jumbo interest rate cuts this month, when it slashed its lending rate from 4.75% to 4.25%. This was the third interest rate cut that has seen them move from the year-to-date high of 5.25%.<\/p>\n

The bank justified the cuts to the need to support an economy that has been ailing for a while in the past few years.<\/p>\n

Odds of more RBNZ cuts rose after the statistics agency published weak economic numbers on Thursday.<\/p>\n

The report showed that the economy has moved into a technical recession<\/a> in the third quarter. It contracted by 1.0% in Q3 after contracting by 1.1% in the previous quarter. That contraction was much deeper than the median estimate of 0.2%.<\/p>\n

The economy contracted by 1.5% on a YoY basis, also much lower than the median estimate of minus 0.4%. It had contracted by 0.5% in the previous quarter. <\/p>\n

This contraction happened because of the relatively weak consumer spending and business investments. It was partially offset by the rising government spending in the country.<\/p>\n

More data released on Friday showed that New Zealand\u2019s trade numbers were not all that good. Imports dropped to N$6.92 billion, while exports rose to $6.48 billion. That left the country with a trade deficit of over $437 million. <\/p>\n

Odds of more RBNZ cuts have also increased because of the falling inflation. The most recent data showed that the headline Consumer Price Index (CPI) dropped to 2.2% in Q3, the lowest level in years. It has dropped from the post-pandemic high of over 7%. <\/p>\n

Central banks usually cut interest rates when inflation is falling in a bid to stimulate growth in the economy.<\/p>\n

Fed divergence<\/h2>\n

The NZD\/USD pair plunged as the hopes of a potential divergence between the Fed and the RBNZ continued. The Fed decided to slash interest rates<\/a> by 0.25% on Wednesday.<\/p>\n

At the same time, officials expect to deliver just two cuts in 2025, much lower than what analysts were expecting. Fed officials had also hinted at four rate cuts in 2025.<\/p>\n

Therefore, if the Fed lives up to the guidance, it means that rates will end the year between 3.50% and 3.75%. <\/p>\n

In contrast, the RBNZ will continue cutting rates further in 2025 to support the ailing economy. Currencies often crash when there is a divergence between the local central bank and the Federal Reserve.<\/p>\n

NZD\/USD technical analysis<\/h2>\n
\"NZD\/USD\"<\/figure>\n

NZD\/USD chart by TradingView<\/a><\/p>\n

The daily chart shows that the NZD\/USD exchange rate has been in a strong downward trend in the past few months. It has now slipped below the key support at 0.5852, its lowest point in April and August this year. <\/p>\n

The pair has also moved below the key support at 0.5775, its lowest swing in October 2023. It has also moved below the 50-day and 200-day moving averages, while the MACD and the Relative Strength Index (RSI) tilted downwards.<\/p>\n

Therefore, the pair will likely continue falling as sellers target the next key support level at 0.5515, its lowest level in October 2022.<\/p>\n

The post NZD\/USD analysis amid potential Fed and RBNZ divergence<\/a> appeared first on Invezz<\/a><\/p>\n

Source link <\/a>
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(Originally posted on : Invezz ) The NZD\/USD exchange rate continued its freefall this week and reached its lowest level since 2022. The kiwi plunged to a low of 0.5600, down by about 12% from its highest level this year, after the latest New Zealand data. Hopes of more RBNZ cuts rise The NZD\/USD pair […]<\/p>\n","protected":false},"author":32,"featured_media":43738,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"om_disable_all_campaigns":false,"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0},"categories":[39],"tags":[],"_links":{"self":[{"href":"https:\/\/crowdfundjunction.com\/blog\/wp-json\/wp\/v2\/posts\/43737"}],"collection":[{"href":"https:\/\/crowdfundjunction.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/crowdfundjunction.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/crowdfundjunction.com\/blog\/wp-json\/wp\/v2\/users\/32"}],"replies":[{"embeddable":true,"href":"https:\/\/crowdfundjunction.com\/blog\/wp-json\/wp\/v2\/comments?post=43737"}],"version-history":[{"count":0,"href":"https:\/\/crowdfundjunction.com\/blog\/wp-json\/wp\/v2\/posts\/43737\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/crowdfundjunction.com\/blog\/wp-json\/wp\/v2\/media\/43738"}],"wp:attachment":[{"href":"https:\/\/crowdfundjunction.com\/blog\/wp-json\/wp\/v2\/media?parent=43737"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/crowdfundjunction.com\/blog\/wp-json\/wp\/v2\/categories?post=43737"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/crowdfundjunction.com\/blog\/wp-json\/wp\/v2\/tags?post=43737"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}