American Invest Hub
  • Politics
  • Investing
  • Business
  • Latest News

American Invest Hub

  • Politics
  • Investing
  • Business
  • Latest News
Investing

NZD/USD analysis amid potential Fed and RBNZ divergence

by admin December 20, 2024
December 20, 2024
NZD/USD analysis amid potential Fed and RBNZ divergence

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 has been in a strong bearish trend in the past few months as the US dollar index continued.

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

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%.

The bank justified the cuts to the need to support an economy that has been ailing for a while in the past few years.

Odds of more RBNZ cuts rose after the statistics agency published weak economic numbers on Thursday.

The report showed that the economy has moved into a technical recession 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%.

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. 

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.

More data released on Friday showed that New Zealand’s 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. 

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%. 

Central banks usually cut interest rates when inflation is falling in a bid to stimulate growth in the economy.

Fed divergence

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 by 0.25% on Wednesday.

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.

Therefore, if the Fed lives up to the guidance, it means that rates will end the year between 3.50% and 3.75%. 

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.

NZD/USD technical analysis

NZD/USD chart by TradingView

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. 

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.

Therefore, the pair will likely continue falling as sellers target the next key support level at 0.5515, its lowest level in October 2022.

The post NZD/USD analysis amid potential Fed and RBNZ divergence appeared first on Invezz

0
FacebookTwitterGoogle +Pinterest
previous post
Russia’s MOEX index has crashed, with 90% of stocks in the red
next post
DXY index analysis: Here’s why the US dollar is soaring

Related Posts

5 Top Weekly TSXV Stocks: Lomiko Metals Surges...

May 19, 2024

North Arrow Minerals

March 2, 2024

Digital Realty stock is severely overvalued; sits at...

September 18, 2024

Move on Unicredit: Societe Generale stock is firing...

March 6, 2025

Barclays share price forms risky patterns ahead of...

January 15, 2025

PDAC President: Critical Metals, Raising Capital Take Center...

March 10, 2024

Nio stock price analysis: analyst sees Tesla rival...

March 19, 2025

XRP price prediction: Is Ripple a good buy...

March 2, 2025

GameStop stock: Time to embrace the MicroStrategy approach?

September 28, 2024

Rare Earths Stocks: 9 Biggest Companies in 2024

August 8, 2024

    Stay updated with the latest news, exclusive offers, and special promotions. Sign up now and be the first to know! As a member, you'll receive curated content, insider tips, and invitations to exclusive events. Don't miss out on being part of something special.


    By opting in you agree to receive emails from us and our affiliates. Your information is secure and your privacy is protected.

    Latest News

    • How Donald Trump’s immigration crackdown may tank the labor market

      August 4, 2025
    • Trump’s tariff threat looms over India’s Russian oil deals

      August 4, 2025
    • Trump moves nuclear submarines near Russia: what triggered the move and what’s ahead

      August 3, 2025
    • BOE rate cuts offer little relief as UK households face mounting financial strain

      August 3, 2025
    • Retail investors shift focus to Europe as US valuations stretch

      August 3, 2025

    Categories

    • Business (3,583)
    • Investing (2,703)
    • Latest News (2,031)
    • Politics (1,530)
    • About us
    • Contact us
    • Privacy Policy
    • Terms & Conditions

    Disclaimer: americaninvesthub.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

    Copyright © 2025 americaninvesthub.com | All Rights Reserved