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Market news: The United States is moving forward with its plan to reopen its embassy in Venezuela.On January 8th, U.S. Energy Secretary Chris Wright announced on the 7th that the United States would control Venezuelan oil sales "indefinitely." Wright stated that the sale of Venezuelan oil would be controlled by the U.S. government, including not only inventory but also future sales "indefinitely." Sales revenue would be deposited into accounts controlled by the U.S. government, and these funds could then flow back to Venezuela "to benefit the Venezuelan people." Wright said the U.S.s immediate goal is to stabilize and increase Venezuelan oil production by providing heavy crude oil diluents, spare parts, equipment, and services. He stated that Venezuelas daily oil production could increase by hundreds of thousands of barrels in the coming years, but returning to historical highs would require hundreds of billions of dollars in investment and "a considerable amount of time." The U.S. will create conditions for major U.S. oil companies to enter Venezuela. The Trump administration is also considering establishing a compensation mechanism for U.S. oil companies investing in Venezuela.Market news: White House officials said the White House has withdrawn Ryan Baaschs nomination to the Federal Trade Commission and he will instead serve as deputy director of the White House National Economic Council.The U.S. personal income report for October and November will be released on January 22.The release date for US December personal income and PCE data has been rescheduled to February 20.

The NZD/USD exchange rate is under pressure as investors anticipate crucial US developments

Alina Haynes

Dec 12, 2022 15:37

 NZD:USD.png

 

Beginning with a high of 0.6411 and a low of 0.6382, the NZD/USD exchange rate is down 0.25 percent, sliding from its previous high of 0.6411 to its previous low of 0.6382. To date, though, it has been the best-performing G10 currency month.

 

ANZ Bank analysts commented, "NZD seasonality is normally positive in December, but while it has that plus rising interest rates on its side, there are no guarantees that it will emerge undamaged from this week's several central bank meetings."

 

The Federal Open Market Committee is due to meet this week, and market participants anticipate a hawkish result. The US producer price index for November was somewhat higher than anticipated, bolstering the case for the Federal Reserve to raise interest rates in the future, albeit at a slower rate.

 

TD Securities analysts estimate that the FOMC will raise rates by 50 basis points at its meeting in December, putting the target range for the Fed funds rate to 4.25 percent to 4.50 percent. "By doing so, the Committee's inflation-adjusted monetary policy stance would move into the restrictive zone. In September, we think that the FOMC will indicate that they will have to shift to a higher-than-expected terminal rate.

 

ANZ Bank analysts stated, "Our key concern is what this may do to the USD, which has been under pressure as the "pivot" narrative has gained traction amid signs of ongoing US inflation."

 

"NZ variables will also play a role, with the HYEFU and GDP due this week," but they are likely to be overwhelmed (again!) by volatility and the global climate.

 

In other news, the US consumer inflation report on Tuesday will set the tone for markets prior to the Federal Reserve meeting. Economists forecast a fall in core inflation to 6.1% in November from 6.3% in October.

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