NZD Drops After Rate Cut: U.S. Dollar Remains Strong

Hello traders, welcome to Wednesday, where the calendar finally picks up after a quiet start to the week. We already had an important interest rate decision from New Zealand, with a rate cut as expected—50 basis points—bringing the Official Cash Rate down to 4.75%. The reaction was negative for the New Zealand dollar, as anticipated, though the market responded more sharply to the statement following the decision. Still to come later today, we have the FOMC meeting minutes, a key event for the U.S. dollar and broader markets.

As for currencies, the New Zealand dollar remains the weakest performer, dragging the Australian dollar lower due to their high correlation. On the other hand, the U.S. dollar continues to lead as the strongest currency, which has been the trend for the past 10 days. Moving to the indices, they are largely range-bound, with European indices struggling while American indices show slightly more resilience. However, the broader trend for indices remains sideways in the mid-term.

Turning to commodities, metals are experiencing a notable drop, especially silver, which has lost 5% in the past three days. Gold is also entering a correction phase after breaking out of a pennant formation to the downside, signaling the potential for a larger bearish move this week. Oil is trying to recover in the pre-European session but continues to face a challenging sentiment following yesterday’s significant drop, which likely marked the end of the bullish correction that began in early September. As we move ahead, today’s FOMC meeting minutes are in focus, but the main event will be tomorrow’s U.S. inflation report.

Source: https://www.axiory.com/analytics/market-news/nzd-drops-after-rate-cut-u-s-dollar-remains-strong