The NZD/USD is little changed and what happens next depends a lot on tomorrow’s Reserve Bank of New Zealand (RBNZ) decision. Economists at ANZ Bank expect a 50bp rate hike to provide support to the kiwi.

Historical experience is that the USD tends to peak early in the tightening cycle

“The USD is hovering near post-COVID highs (in DXY terms), having been fuelled by rapidly rising bond yields there and flight to safety considerations, but the historical experience is that the USD tends to peak early in the tightening cycle, and that’s hanging over the market a touch.”

“On the Kiwi side, we expect a 50bp OCR hike tomorrow. We expect this will lend the NZD support on grounds that it’ll add to RBNZ credibility and cap inflation down the track. So it’s all liking a bit binary, with markets pricing in a 43bp hike.”

See – RBNZ Preview: Forecasts from six major banks, surprising with a double shot hike?

This article was originally published by Fxstreet.com.Read the original article here.

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