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On September 2, European Central Bank Executive Board member Schnabel said that the ECB should keep interest rates unchanged because the eurozone economy can remain stable in the face of US tariffs and inflation may still be higher than expected. The ECB previously ended its year-long easing cycle, and policymakers are currently waiting for the full impact of the US tariff agreement reached in July to decide whether to further reduce borrowing costs. Schnabel is the most influential member of the ECBs hawks. She believes that there is no need to cut interest rates further. The current 2% policy rate may "mildly" stimulate the already active economy. She said: "I think we may have adopted a slightly loose policy, so under the current circumstances, I dont see a reason to cut interest rates further."Kocher, the incoming ECB board member: There are different opinions on the current interest rate level, but some members of the committee advocate taking this cautious approach in the coming weeks, and I certainly agree with this view.Indian Prime Minister Modi: We are developing some of the most advanced chips in the world.Indian Prime Minister Modi: Oil is black gold, and chips are digital diamonds.Japans 30-year government bond yield rose 1.5 basis points to 3.205%.

NZD/USD finds support near 0.6220; a decline appears more probable due to China's Covid concerns

Alina Haynes

Nov 28, 2022 15:04

 截屏2022-11-28 上午10.39.08.png

 

China's anti-Covid shutdown protests have weakened commodity-linked currencies, resulting in a gap-down start of roughly 0.6220 for the NZD/USD pair. During the previous week, the New Zealand dollar dropped after failing to surpass the round-level barrier of 0.6300.

 

Individuals have taken to the streets in China to demonstrate their opposition against the zero-tolerance policy, leading to a rise in civil unrest. Due to Chinese leader Xi Jinping's conservative posture and authoritarian framework, global markets have become more risk-averse. This has created an economic expansion risk and may worsen the already shaky housing market. Increasing apprehensions about societal risks may also result in political instability, which may have long-lasting detrimental effects on economic structure.

 

Notably, New Zealand is one of China's most important trading partners, and instability in China could damage the New Zealand Dollar.

 

In the meantime, the US Dollar Index (DXY) is profiting from investors' liquidity as the demand for safe-haven assets surges. The USD Index is hovering around 106.20 and attempting to reduce volatility as China's anti-locking protests restrict the upside and predictions of a slowdown in the Federal Reserve's larger rate hike cycle limit the downside (Fed).

 

S&P500 futures are under heavy pressure from market players due to a risk-averse market mentality. In anticipation of Fed chief Jerome Powell's address on Wednesday, yields on 10-year US Treasuries have decreased to approximately 3.68 percent. The Fed Chair's speech could dispel suspicions about a pause to the Fed's current rate-hiking program.