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On June 4th, Investinglive analyst Eamonn Sheridan stated that reports indicate Israel and Lebanon, under US guidance, have reached a framework agreement for a ceasefire, with full-scale talks scheduled to resume the week of June 22nd. However, this is contingent on Hezbollahs complete withdrawal from southern Lebanon. Geopolitical risk premiums in the oil market will likely absorb this headline, largely treating it as already priced in. This Lebanese ceasefire plan, framed by Hezbollahs adherence to the agreement and the establishment of a "pilot zone," is essentially a document aimed at advancing the process, not a final solution. The condition attached to the plan—Hezbollahs complete ceasefire and withdrawal from the Litani River region—is precisely the crux of the failures that led to previous arrangements. The market will note that the next round of substantive negotiations will not take place until the week of June 22nd, three weeks from now. If there is any definite takeaway, it is that this announcement confirms the Lebanese front remains a dynamic and unpredictable factor, rather than a settled situation. At the same time, it does not offer any substantial help in resolving the situation in the Strait of Hormuz, or in alleviating the broader US-Iran conflict that is currently driving up oil prices.U.S. State Department: All parties condemn Irans attacks on countries in the region.On June 4th, US President Trump told reporters at the White House on the 3rd that negotiations between the US and Iran were progressing well and an agreement could be reached by the end of the week. Trump said, "Ive heard the negotiations themselves are going very well, actually quite well… If an agreement is reached, it will likely be announced this weekend." When asked whether the ceasefire agreement between the US and Iran would still be in effect after Irans latest attack on Kuwait, Trump said, "Everything happens for a reason," adding that the US military had launched a fairly heavy attack on Iran two nights ago, "so some things happen for a reason, and those reasons usually make some sense." He also said that Irans actions were "not a big deal," and that "we have the situation under control and have quickly nipped it in the bud."According to The Information, Meta Platforms (META.O) plans to charge up to $200 per month for its planned "Hatch" AI agent.Broadcom CEO: The company plans to deliver 10 gigawatts of computing power in 2027, and expects to achieve even greater computing power growth in 2028.

Despite a stable DXY and a hawkish RBNZ stance, NZD/USD bulls tinker around 0.5700

Daniel Rogers

Oct 19, 2022 15:48

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On Wednesday morning, NZD/USD bulls struggle to keep control during the three-day uptrend, making minor gains above 0.5700. The market's sluggish performance in light of the dormant US Dollar Index (DXY) and the risk-on stance is reflected in this. However, buyers remain upbeat due to the hawkish view for the Reserve Bank of New Zealand's (RBNZ) upcoming action.

 

Following the announcement of New Zealand's (NZ) Q3 Consumer Price Index, several banks increased their favorable forecasts for the RBNZ's upcoming action (CPI).

 

However, against the market's expectation of 1.6% and the prior data of 1.6%, New Zealand's Q3 CPI jumped to 2.2%. The data also showed that the YoY CPI increased to 7.2% from 7.2% earlier and 6.6% as was predicted. The Australia and New Zealand Banking Group (ANZ) said, based on the information: "The RBNZ will need to take action as core inflation continues to remain entrenched and shows no signs of turning the corner. We expect the OCR to rise by 75 basis points to 5% in November and February."

 

The risk-on attitude is also helping the NZD/ascent elsewhere. In keeping with Wall Street's second straight day of gains, USD's S&P 500 Futures rise 0.80% intraday, while the US Dollar Index (DXY) holds steady near 112.00 and US 10-year Treasury yields fluctuate around the 4.00% level.

 

News reports about the battle of Russian forces in Ukraine and UK Chancellor Jeremy Hunt's ability to fend off the impacts of the recession appear to be the main drivers of the recent market optimism.

 

It should be noted that despite risk-on attitude and sluggish Treasury rates, the DXY does not increase in response to improved industrial production and aggressive Fed statements. Neel Kashkari, president of the Minneapolis Federal Reserve Bank, recently said: "Until I see persuasive evidence that core inflation has at least peaked, I am not willing to pause rate hikes."

 

Future Fed speakers will join housing-related secondary US data to thrill NZD/USD speculators. However, barring any risk-averse surprises or unexpected RBNZ pronouncements, the Kiwi-Dollar pair is likely to continue strengthening.

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