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February 19th - Federal Reserve officials reiterated their concerns about inflation, with several policymakers suggesting that the central bank may need to raise interest rates if inflation persists above target. The minutes of the Feds January meeting revealed that "several participants indicated they would have supported a two-way description of the Committees future interest rate decisions, reflecting that raising the target range for the federal funds rate might be appropriate if inflation remains above target." The minutes also showed that "the vast majority of participants judged that downside risks to employment had eased in recent months, but risks to persistent inflation remained." According to the latest minutes, one group of policymakers believed that further rate cuts were unlikely, at least in the near term. The minutes stated: "Several participants cautioned that further easing of policy against the backdrop of high inflation readings could be misinterpreted as a weakening of policymakers commitment to the 2% inflation target."February 19th - The minutes of the Federal Reserve meeting revealed that several participants believed further interest rate cuts were more likely if inflation fell as they expected, but most indicated that inflation was likely to progress more slowly than generally anticipated. At its January meeting, the FOMC voted 10-2 to maintain the benchmark federal funds rate in the 3.5%-3.75% range. Waller and Milan voted against a 25 basis point cut. The committee removed wording regarding increased downside risks to employment from the previous three statements. Data released since the Feds January meeting shows accelerating economic growth, slowing inflation, and a stabilizing labor market. According to the Bureau of Labor Statistics, the Consumer Price Index (CPI) rose slightly in January, influenced by lower energy costs. The core CPI (excluding food and energy) rose in line with expectations.Federal Reserve meeting minutes: Federal Reserve staff have a stronger outlook on economic activity than in December, expecting inflation to be slightly higher than previously anticipated and the unemployment rate to gradually decline starting in 2026.Federal Reserve meeting minutes: A minority of participants favored a rate cut in January.Federal Reserve meeting minutes: Several participants believed that further rate cuts could undermine market perception of the commitment to the inflation target.

USD / NZD Bulls Arrive At The Highs And Apply Pressure Below 0.6250

Daniel Rogers

Mar 02, 2023 16:17

 NZD:USD.png

 

NZD/USD is down roughly 0.27 percent, falling from a high of 0.6257 to a low of 0.6238, wiping out some of the gains made in the middle of the week in reaction to information indicating a recovery in China demand, which raised commodity prices.

 

This came after Australia released a disappointing report, where GDP growth fell to 0.5% quarter-over-quarter from 0.7% earlier and fell short of consensus forecasts of a 0.8% rise. The information raised the chance that the Reserve Bank of Australia would stop raising rates sooner than anticipated, which originally hurt both currencies.

 

However, the kiwi profited from speculative buying after China's non-manufacturing activity expanded at a faster pace in February and the Caixin/S&P Global manufacturing PMI report for last month also exceeded expectations. The offshore yuan rose 1.3% to 6.8683 per dollar, recording its largest one-day rise since late November.

 

The New Zealand currency outperformed most of its peers, according to ANZ Bank analysts, and did well on crosses, especially NZD/AUD. "After the strong German CPI report, the EUR was a strong performer, and the Kiwi followed suit. This trend may have been worsened by stop-loss buying in the NZD/AUD pair because there was no clear NZD catalyst. This may result in muted price action in the coming days.

 

The USD mood is also changing. Bond yields climbed as a result of strong data last week, which caused the DXY to soar. However, last night's solid data dragged on the dollar in a "good news is bad news" way, probably due to worries that the Fed will orchestrate a recession. Is the strength of the NZD a tardy acknowledgment of the economy's resilience and post-cyclone recovery? Has performed admirably."


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