The New Zealand dollar is slightly lower on Friday after sharp gains a day earlier. It is trading at 0.6163 at the time of writing, down 0.27% on the day. On Thursday, the New Zealand dollar jumped 0.76% as the fell more than expected.
US PPI Softer Than Expected
The meets on Sept. 18 and the meeting is live, as it’s unclear how deep the Fed will cut interest rates. This will mark the first interest rate cut since March 2020. The Fed is late to join the rate-cutting club, as most major central banks have already commenced a rate-cutting cycle in response to lower inflation. The Fed has widely telegraphed a rate cut but it will be a momentous event, all the more so given the uncertainty of the extent of the cut.
Market pricing of a rate cut continues to swing wildly. Thursday’s dropped to 1.7% in August, down from a downwardly revised 2.1% in July and below the market estimate of 1.8%. This sent the odds of a 50-basis point cut surging to 41%, compared to 13% prior to the release.
The Fed would probably prefer to start the new rate-cutting cycle with a modest 25 bps move, but ever since the market meltdown in early August, an oversized 50 bps cut has become a strong possibility. The is showing clear signs of weakness and this has raised market fears that the US economy could enter a recession.
remained in contraction mode in August. The PMI improved to 45.8, up from a revised 44.4 but shy of the forecast of 47. All of the key sub-indexes showed contraction. The manufacturing sector continues to struggle and has contracted for 18 straight months.
NZD/USD Technical
NZD/USD is putting pressure on support at 0.6164. Below, there is support at 0.6142. There is resistance at 0.6205 and 0.6223.
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Conclusion
In conclusion, the New Zealand dollar’s fluctuations reflect the uncertainty in the global economy, particularly in light of the upcoming Fed meeting. The market is eagerly awaiting the Fed’s decision on interest rates, with predictions varying widely. The US economy’s struggles and the potential for a recession have added to the pressure on the New Zealand dollar.
As investors navigate these uncertain times, staying informed through platforms like DeFi Daily News can provide valuable insights and analysis on the latest trends in the financial markets. Keep a close eye on developments in the US economy and the Fed’s actions, as they are likely to have a significant impact on the New Zealand dollar and other currencies. Stay tuned for more updates and analysis on DeFi Daily News for all your financial news needs.
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