{"id":14649,"date":"2024-08-19T08:46:00","date_gmt":"2024-08-19T08:46:00","guid":{"rendered":"https:\/\/www.vtmarkets.com\/?p=14649"},"modified":"2024-08-19T08:46:00","modified_gmt":"2024-08-19T08:46:00","slug":"new-zealand-dollar-extends-rebound-on-fed-rate-cut-expectations","status":"publish","type":"post","link":"https:\/\/www.global-vtrader.com\/en\/analysis\/new-zealand-dollar-extends-rebound-on-fed-rate-cut-expectations\/","title":{"rendered":"New Zealand dollar extends rebound on Fed rate cut expectations"},"content":{"rendered":"\n<p class=\"wp-block-paragraph\"><strong>Key points:<\/strong>\u00a0<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>NZDUSD extends gains, supported by expectations of imminent Fed rate cuts.\u00a0<\/li>\n\n\n\n<li>The Reserve Bank of New Zealand (RBNZ) recently cut the official cash rate to 5.25%, with more easing likely.\u00a0<\/li>\n\n\n\n<li>Upcoming FOMC Minutes and Jerome Powell\u2019s speech at Jackson Hole will be key for market direction.\u00a0<\/li>\n<\/ul>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity is-style-dots\" \/>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>This is a follow up article to: <a href=\"https:\/\/www.vtmarkets.com\/analysis\/australian-and-new-zealand-dollars-face-pressure-from-us-growth-concerns\/\" target=\"_blank\" rel=\"noreferrer noopener\">Australian and New Zealand dollars face pressure from US growth concerns<\/a>\u00a0<\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The New Zealand dollar (Symbol: NZDUSD) maintained its upward momentum, trading at around $0.606, as it extended its rebound for the second consecutive session. <\/p>\n\n\n\n<p class=\"wp-block-paragraph\">This rally has been largely supported by a weakening U.S. dollar, driven by market expectations that the Federal Reserve will begin cutting interest rates as early as next month.\u00a0<\/p>\n\n\n\n<figure class=\"wp-block-image size-large is-resized\"><img decoding=\"async\" src=\"https:\/\/www.vtmarkets.com\/wp-content\/uploads\/2024\/08\/20240819-164216-1024x462.jpg\" alt=\"The NZD\/USD chart illustrates a strong uptrend, with the price consistently trading above key Exponential Moving Averages (EMAs). The upward slope of the EMAs, especially the 72-period EMA, reinforces the ongoing bullish momentum. Moreover, the MACD indicator signals positive momentum, with the MACD line positioned above the signal line, indicating that the bullish trend is likely to continue in the near term.\" class=\"wp-image-14650\" style=\"width:1450px;height:auto\" \/><\/figure>\n\n\n\n<p class=\"has-text-align-center wp-block-paragraph\"><em>Picture: NZDUSD extends rebound on Fed rate cut expectations, as observed on the <a href=\"https:\/\/vtmarketsapp.onelink.me\/CD7D\/240525WA\" target=\"_blank\" rel=\"noreferrer noopener\">VT Markets app<\/a>.\u00a0<\/em><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Going back to the charts, we see it indicating a solid uptrend, with the price consistently trading above the key Exponential Moving Averages (EMAs). The upward slope of the EMAs, particularly the 72-period EMA, supports the continuation of this bullish momentum. <\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Additionally, the MACD indicator is showing positive momentum, with the MACD line above the signal line, suggesting that the bullish trend may persist in the near term.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Traders should keep an eye on the resistance level at 0.60861, which could be a key hurdle for the pair. If the price breaks above this level, it may signal further upside potential. <\/p>\n\n\n\n<h2 class=\"wp-block-heading has-medium-font-size\"><strong>Traders bullish, but cautious<\/strong><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">Traders are now closely watching key events such as the release of the Federal Open Market Committee (FOMC) Minutes and Fed Chair Jerome Powell\u2019s upcoming speech at the Jackson Hole Economic Symposium. <\/p>\n\n\n\n<p class=\"wp-block-paragraph\">These events are likely to provide further insights into the U.S. central bank\u2019s monetary policy direction, which has significant implications for the NZD\/USD pair.\u00a0<\/p>\n\n\n\n<figure class=\"wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter\"><div class=\"wp-block-embed__wrapper\">\n<blockquote class=\"twitter-tweet\" data-width=\"500\" data-dnt=\"true\"><p lang=\"en\" dir=\"ltr\">What clues will Jackson Hole provide about the timing of US rate cuts? <a href=\"https:\/\/t.co\/Xy8IEH2g2J\">https:\/\/t.co\/Xy8IEH2g2J<\/a><\/p>&mdash; Financial Times (@FT) <a href=\"https:\/\/twitter.com\/FT\/status\/1825207792405250243?ref_src=twsrc%5Etfw\">August 18, 2024<\/a><\/blockquote><script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script>\n<\/div><\/figure>\n\n\n\n<p class=\"wp-block-paragraph\">Last week, the Reserve Bank of New Zealand (RBNZ) reduced its official cash rate to 5.25%, marking its first cut since March 2020. This move was accompanied by signals from RBNZ Governor Adrian Orr that more easing could be on the horizon. <\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Orr also expressed confidence that inflation is now back within the central bank\u2019s 1-3% target range, reinforcing the case for a more accommodative monetary policy stance.\u00a0<\/p>\n\n\n\n<figure class=\"wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter\"><div class=\"wp-block-embed__wrapper\">\n<blockquote class=\"twitter-tweet\" data-width=\"500\" data-dnt=\"true\"><p lang=\"en\" dir=\"ltr\">New Zealand\u2019s central bank intends to reduce interest rates toward a more neutral setting at a measured pace, now that it has begun its easing cycle, Reserve Bank Governor Adrian Orr said <a href=\"https:\/\/t.co\/EXGieNbp9o\">https:\/\/t.co\/EXGieNbp9o<\/a><\/p>&mdash; Bloomberg (@business) <a href=\"https:\/\/twitter.com\/business\/status\/1824044120110731644?ref_src=twsrc%5Etfw\">August 15, 2024<\/a><\/blockquote><script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script>\n<\/div><\/figure>\n\n\n\n<p class=\"wp-block-paragraph\">On the economic front, the business activity of New Zealand showed signs of improvement in July, with manufacturing activity rising to 44 from 41.1 in June, and services activity increasing to 44.6 from 40.7.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">These figures, while still below the 50-mark that separates contraction from expansion, indicate a slight recovery from the previous month\u2019s lows.\u00a0<\/p>\n\n\n\n<h2 class=\"wp-block-heading has-medium-font-size\"><strong>Market outlook for the Kiwi<\/strong>&nbsp;<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">The upcoming FOMC Minutes and Powell\u2019s speech at Jackson Hole could trigger significant volatility, especially if the tone turns hawkish instead of from the current dovish expectations.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Related content: <a href=\"https:\/\/www.vtmarkets.com\/blog\/education\/interest-rate-tug-of-war-for-central-banks-hawkish-vs-dovish\/\" target=\"_blank\" rel=\"noreferrer noopener\">What is hawkish vs dovish?<\/a>\u00a0<\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Otherwise, the anticipation of rate cuts in the U.S. will continue to drive the U.S. dollar lower, providing a supportive environment for the NZD. However, caution is advised as the market remains highly sensitive to any shifts in expectations. &nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><a href=\"https:\/\/www.vtmarkets.com\/trade-now\/\" target=\"_blank\" rel=\"noreferrer noopener\"><strong>Create your live VT Markets account<\/strong><\/a><strong> and <\/strong><a href=\"https:\/\/myaccount.vtmarkets.com\/login\" target=\"_blank\" rel=\"noreferrer noopener\"><strong>start trading<\/strong><\/a><strong> now.<\/strong>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The New Zealand dollar continued its recovery, as markets anticipate upcoming Federal Reserve rate cuts. Focus shifts to the FOMC Minutes and Powell\u2019s speech at Jackson Hole for further guidance.<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[27],"tags":[28,12,40],"class_list":["post-14649","post","type-post","status-publish","format-standard","hentry","category-analysis","tag-dollar","tag-forex","tag-kiwi"],"acf":[],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.global-vtrader.com\/en\/wp-json\/wp\/v2\/posts\/14649","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.global-vtrader.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.global-vtrader.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.global-vtrader.com\/en\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.global-vtrader.com\/en\/wp-json\/wp\/v2\/comments?post=14649"}],"version-history":[{"count":0,"href":"https:\/\/www.global-vtrader.com\/en\/wp-json\/wp\/v2\/posts\/14649\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.global-vtrader.com\/en\/wp-json\/wp\/v2\/media?parent=14649"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.global-vtrader.com\/en\/wp-json\/wp\/v2\/categories?post=14649"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.global-vtrader.com\/en\/wp-json\/wp\/v2\/tags?post=14649"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}