New Zealand Dollar Strengthens Despite Rate Cut

Hello traders, and welcome to Wednesday trading. Today’s macro calendar is already shaping up to be impactful. Inflation from Australia came in lower than expected, leading to a weaker Australian dollar. Additionally, we had an interest rate decision from New Zealand, which delivered the expected 50 basis points cut. Despite the rate cut, the New Zealand dollar is gaining strength, bolstered by hawkish comments from Reserve Bank of New Zealand Governor Adrian Orr.

Governor Orr emphasized that while they didn’t consider a 75 basis points cut, their baseline assumption involves another 50 basis points reduction in February, subject to activity levels. The market interpreted this as bullish, contributing to the Kiwi’s current strength.

Later today, we will shift focus to the United States, with key data releases including preliminary GDP, unemployment claims, and the Core PCE Price Index. These numbers are expected to shape sentiment on the American dollar and broader markets. Meanwhile, the European calendar remains quiet, leaving the spotlight on the antipodes and the US.

On the currency front, safe haven currencies are in demand today, with the Japanese yen and Swiss franc leading gains. Conversely, the Canadian dollar, Euro, and US dollar are under pressure. The Australian dollar is also weaker, reflecting the lower-than-expected CPI data.

Futures markets are showing a shade of green at the open, with indices attempting to extend gains from earlier this week. However, given mixed global sentiment, it remains to be seen whether this positive momentum will carry through the session.

On the commodities front, there are bullish attempts on metals, but the overall trend remains subdued. Metals are consolidating after a sharp drop earlier in the week, moving sideways as they try to recover. Oil, on the other hand, is seeing minor gains today, but the weekly trend remains negative. Bullish reversals are possible, but the broader downtrend still dominates sentiment for oil.

Source: https://www.axiory.com/analytics/market-news/new-zealand-dollar-strengthens-despite-rate-cut