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MTrading Team • 2023-02-22

NZDUSD bulls cheer RBNZ rate hike ahead of FOMC Minutes

NZDUSD bulls cheer RBNZ rate hike ahead of FOMC Minutes

Traders portray the typical pre-event anxiety ahead of Fed Minutes as recently firmer US data bolstered hawkish bets on the US central bank’s next moves but talks of policy pivot aren’t off the table. In doing so, the market players pare the previous day’s moves that propelled the US dollar and weighed on the commodities, as well as Antipodeans.

It should be noted that the GBPUSD managed to remain firmer as recent talks about BoE and UK’s wage negotiations with nurses favor the Cable buyers amid a retreat in the greenback. On the same line is the NZDUSD that cheered the RBNZ’s 0.50% rate hike and readiness to offer more such increases. However, the RBNZ Governor’s expectations of recession seem to limit the Kiwi pair’s moves.

Gold stays dicey but crude oil prints mild losses while extending the previous day’s downside.

BTCUSD and ETHUSD both extend the latest pullback from multi-day high amid aggressive fears of a strong regulatory framework and more pain from major industry players.

Following are the latest moves of the key assets:

  • Brent oil extends the previous day’s losses to $82.60, down 0.10% intraday at the latest.
  • Gold remains indecisive near $1,935-40, after snapping three-day uptrend the previous day.
  • USD Index pares the biggest daily gains in a week around 104.00 as we write.
  • Wall Street closed in the red and weighed on the equities in the Asia-Pacific region, as well as the shares in Europe and the UK.
  • BTCUSD and ETHUSD drop for the second consecutive day to $24,000 and $1,650 by the press time.
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Calm before the storm…

Strong PMIs, especially from the UK and the US, allowed the respective currencies to regain upside momentum followed by a dicey day. The US Dollar, however, gained more than the British Pound as Brexit woes join more fundamental weaknesses in the UK economy than the US ones. Additionally, the Fed policymakers were more hawkish in their recent attempt than the BoE members. Furthermore, escalating fears of nuclear use by Russia and China’s ties to Moscow propel the rush towards risk-safety, which in turn adds strength to the US Dollar.

Elsewhere, RBNZ’s 0.50% rate hike and China’s readiness for more stimulus favor the NZDUSD bulls even as the RBNZ Governor’s fears of recession probed the upside momentum afterward. On the same line, GBPUSD stays firmer even as economic slowdown concerns poke the Cable buyers.

Furthermore, AUDUSD portrays its risk-barometer status by printing mild losses, tracking Wall Street and equities in the Asia-Pacific zone, not to forget downbeat Aussie data. 

It should be noted, however, that Gold lacks clear directions as traders reassess the metal’s traditional safe-haven status. On the other hand, Brent oil holds a place on the bear’s radar.

It should be noted that BIS Chief’s remarks raised concerns about the stablecoins and joined the regulatory fears from the US SEC to weigh on BTCUSD and ETHUSD.

  • Strong buy: USDJPY
  • Strong sell: ETHUSD, GBPUSD
  • Buy: USD Index, USDCAD, Nasdaq, EURUSD
  • Sell: DAX, FTSE 100, gold, BTCUSD, AUDUSD

FOMC Minutes are the key

While second-tier data from Germany may entertain markets, together with the geopolitical headlines, major attention will be given to the Fed Minutes. The reason could be linked to the strong US data, hawkish Fed talks and chatters about policy pivot. Should the Minutes portray the policymakers’ cautious optimism, the odds of witnessing the US Dollar’s decline can’t be ruled out.

May the trading luck be with you!