Nzdusd rises as New Zealand cuts rates and US inflation moderates

NZDUSD Analysis

Performance after Thursday
Period	Pct	Chg	Momentum
Thursday	0.41%	24.7 Pips
Week to-date	-4.01%	-254.9 Pips
October	-3.95%	-250.4 Pips

Upcoming key events (London Time)

Fri 01:30 PM USD Producer Price Index (12-mth)

What happened lately

In the United States, the Consumer Price Index (CPI) witnessed a steady increase of 0.2% on a seasonally adjusted basis for September, consistent with the increments seen in August and July, as reported by the U.S. Bureau of Labor Statistics. Over the past 12 months, the all-items index has risen by 2.4%, marking the smallest 12-month increase since February 2021. This suggests a moderating inflation environment that aligns with the Federal Reserve’s aim to keep inflation under control while sustaining economic growth.

In New Zealand, the recent decision by the Reserve Bank of New Zealand (RBNZ) to cut the Official Cash Rate to 4.75% from a previous 5.25% marks a shift in monetary policy. This cut suggests that the central bank is looking to stimulate the economy by making borrowing cheaper, potentially in response to economic headwinds or lower inflation expectations. This move is reflective of central banks’ strategies to fine-tune economic conditions to foster growth and stabilize prices.

The NZDUSD exchange rate increased by 0.41% to 0.60949, potentially influenced by the divergent monetary policy paths of the U.S. and New Zealand. While the U.S. is experiencing a gradual inflation moderation, the RBNZ’s decision to lower rates may have led investors to speculate that the economic environment in New Zealand is softer, prompting a weaker Kiwi relative to the U.S. dollar. In the short term, the NZDUSD dynamic could be further impacted by upcoming economic indicators like the U.S. Producer Price Index, which could offer insights into wholesale inflation and influence USD sentiment. Depending on the PPI data, further movements in the NZDUSD could be expected, as market participants adjust their positioning according to inflation expectations and interest rate outlooks in both countries.

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What can we expect from NZDUSD today?

NZDUSD on Thursday rose 0.41% to 0.60949. Price is below 9-Day EMA while Stochastic is rising.

Updated daily direction for NZDUSD looks bullish as the pair ended higher after Thursday trading session.

Looking ahead for the day, immediate upside resistance level is R1 at 0.61107 with break above could target R2 at 0.61266 or figure level area. While towards the downside, we are looking at daily low of 0.60532 as an important support. Break below this level could weaken the current bullish momentum. A break above 0.60978 may suggest continuation after recent positive movement.

For the week to-date, take note that NZDUSD is bearish as the pair posted lower by -4.01%.

Key levels to watch out:

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