S&P 500 — US Large Cap Index
FTSE 100 — UK Blue Chips
Euro Stoxx 50 — Eurozone Leaders
DAX 40 — German Equities
CAC 40 — French Market Index
Nikkei 225 — Japan Benchmark
Hang Seng — Hong Kong Index
Shanghai Composite — China Mainland
ASX 200 — Australian Market
TSX Composite — Canada Index
Nifty 50 — India Large Cap
STI Index — Singapore Market
KOSPI — South Korea Index
Bovespa — Brazil Equities
JSE Top 40 — South Africa Index
IPC Index — Mexico Market
- NZD/USD trades with a mild negative bias on Tuesday, though the downside remains cushioned.
- The divergent RBNZ-Fed policy expectations should continue to act as a tailwind for spot prices.
- Traders might also opt to wait on the sidelines ahead of this week’s important US macro releases.
The NZD/USD pair ticks lower during the Asian session on Tuesday and moves further away from an over one-month peak, around mid-0.5700s, touched the previous day. Spot prices currently trade near the 0.5720 region, though the fundamental backdrop warrants some caution for bearish traders and before positioning for deeper losses.
The New Zealand Dollar (NZD) might continue to draw support from the Reserve Bank of New Zealand’s (RBNZ) hawkish outlook on the future policy path. The US Dollar (USD), on the other hand, languishes near a two-week low set on Monday amid bets for another rate cut by the Federal Reserve (Fed) this month, which acts as a tailwind for the NZD/USD pair. Apart from this, the upbeat market mood undermines the safe-haven buck and could benefit the risk-sensitive Kiwi.
The RBNZ delivered a fully priced 25 basis points (bps) rate cut last week and signaled an end to its easing cycle. In contrast, the recent comments from several Fed officials suggested that another interest rate cut in December is a live option. Moreover, tepid US economic data released recently indicated that growth in the world’s largest economy is cooling and inflationary pressures are muted. This, in turn, backs the case for further policy easing by the Fed and favors the USD bears.
Traders, however, seem reluctant to place aggressive bets and opt to wait for this week’s important US macro data, including the Personal Consumption Expenditure (PCE) Price Index on Friday. The crucial inflation data will play a key role in driving the USD demand and providing some impetus to the NZD/USD pair heading into next week’s key central bank event risk – the highly anticipated two-day FOMC meeting starting next Tuesday.
