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The Federal Reserve will release the minutes of its monetary policy meeting in ten minutes.Market news: The United States plans to halve tariffs on Canadian steel and aluminum in a trade agreement.On August 20th, US President Trump told reporters at the White House on the 19th that negotiations with Iran might resume "at some point," but Iran must completely abandon its nuclear weapons. When asked if the US would return to negotiations, Trump said, "Maybe at some point. But right now, I think the situation is very good." He then added, "The logic is simple, they have to completely give it up," and "Iran must never have nuclear weapons." Trump reiterated that the US "owns" and "completely controls" the Strait of Hormuz, and stated that Irans "occasionally launching drones does cause trouble."On August 20, Iraqi Prime Minister Zaidi, President Amidi, and Speaker of Parliament Khalbsi met separately in Baghdad on August 19 with visiting Iranian Islamic Parliament Speaker Qalibaf to exchange views on issues such as consolidating bilateral relations and easing regional tensions.On August 20th, Fxstreet analyzed that market expectations for interest rate hikes have declined significantly since the Federal Reserves July meeting. According to the CME FedWatch Tool, the market currently expects a 34% probability of a 25 basis point rate hike in September, down from about 60% three weeks ago; meanwhile, maintaining the current interest rate has become the clear benchmark scenario for the market. Against this backdrop, the key question facing the dollar is: were the three dissenting votes at the July meeting merely the hawkish stance of individual officials, or did they reflect a broader hawkish tendency within the FOMC? If the meeting minutes show that some officials who voted to maintain the current interest rate actually believed that the Fed might soon need to further tighten monetary policy, then expectations for a September rate hike could resurface. In this scenario, both US Treasury yields and the dollar could find support. However, the market reaction may still be relatively limited. Meeting minutes have a lag, and data released since the meeting has already changed the economic situation. Therefore, before the September meeting, investors may pay closer attention to upcoming US economic data and Warshs speech at the Jackson Hole Economic Symposium to reassess the Feds monetary policy outlook.

NZDUSD consolidates near 0.6100, closing below Friday's two-month peak

Alina Haynes

Nov 14, 2022 18:54

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The NZDUSD pair struggles to capitalize on last week's breakthrough momentum through the 100-day Simple Moving Average, bouncing between moderate gains and slight losses throughout Monday's early European session. The pair is currently trading slightly below the 0.6100 level, practically flat on the day, and remains close to Friday's two-month high.

 

A convergence of variables permits the US Dollar to stabilize at its lowest level since mid-August, acting as a headwind for the NZDUSD pair. In response to Christopher Waller's more hawkish remarks on Sunday, U.S. Treasury bond yields rise. It is expected that this, along with a softer tone on equity markets, will benefit the safe-haven dollar and exert some downward pressure on the risk-averse New Zealand dollar.

 

Waller indicated during a conversation in Sydney, Australia, that the markets had overreacted to October's weaker-than-expected consumer price inflation numbers. Waller stated that the Federal Reserve was not lessening its fight against inflation and that a string of moderate CPI readings would be required for the US central bank to soften its approach. This increases US Treasury bond yields and helps support USD demand, notwithstanding the lack of confidence in the intraday rise.

 

A greater possibility that the Federal Reserve will slow the pace of its policy tightening discourages USD bulls from placing risky trades. Moreover, optimism surrounding a likely rollback of COVID-19 measures in China supports the NZD/USD pair and restricts its downside. Therefore, the subdued intraday price movement can be characterized as a bullish consolidation phase, meaning that any significant pullback is likely to be purchased and remain confined.

 

The United States is not slated to provide any market-moving economic data on Monday, leaving the USD at the mercy of US bond yields. Traders will also consider Lael Brainard's anticipated Fed governor address. Together with the broader risk sentiment, this will be analyzed for short-term trading opportunities in the NZDUSD pair prior to the release of Chinese economic data on Tuesday.

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