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MTrading Team • 2023-04-05

NZDUSD bulls rejoice softer US Dollar, RBNZ’s hawkish move

NZDUSD bulls rejoice softer US Dollar, RBNZ’s hawkish move

Downbeat US employment clues and activity data joined easy Fed rate hike bets to portray cautious optimism during early Wednesday. The same joined sluggish yields to weigh on the US Dollar as the USD Index renews a two-month low.

In addition to the downbeat greenback, a stronger-than-expected RBNZ rate hike allows NZDUSD to lead the major currency bulls against the USD. Also helping the Kiwi pair buyers could be the absence of China and Hong Kong as it reduces the geopolitical challenges for the Antipodeans.

Further, Gold price renews a yearly high and the crude oil also grinds higher at the one-month top. It’s worth observing that the EURUSD and GBPUSD remain lackluster ahead of another round of top-tier US data.

Equities trade mixed while the yields struggle to recover as the market keeps bonds on its radar.

Cryptocurrencies also remain firmer amid broad US Dollar weakness and hopes of more fund inflow.

Following are the latest moves of the key assets:

  • Brent oil remain lackluster around $85.50, surrounding the highest levels in a month.
  • Gold rises to the fresh high since March 2022, up 0.30% near $2,026 as we write.
  • USD Index drops to the lowest level since early February, down 0.05% near 101.55 at the latest.
  • Wall Street closed minor losses and so did the equities in the Asia-Pacific region. However, shares in Europe and the UK remain pressured of at the latest.
  • BTCUSD and ETHUSD remain firmer around $28,500 and $1,920 in that order.
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Nothing positive for the Dollar

Although the Fed policymakers keep trying to convince that the inflation fears are enough for them to keep the rate hike trajectory on the table, the even case of a 0.25% rate increase in May fail to impress the US Dollar bulls, especially amid the downbeat US data. Also weighing on the greenback are the talks that some of the countries, including Russia, China and Brazil, are up for replacing the US Dollar from its reserve currency status.

On the other hand, RBNZ surprises markets with a 0.50% rate hike, versus the 0.25% expected, and propels the NZDUSD. That said, the AUDUSD fails to cheer USD weakness, as well as RBA Governor Lowe’s hawkish remarks as the Aussie central bank has already paused the rate lift trajectory the previous day.

EURUSD and GBPUSD remain cautiously bullish as their respective central bankers and statistics suggest the peak of interest rate is nearby.

Elsewhere Gold remains firmer and renews the 2023 peak while oil price grinds higher even as USDCAD and USDCHF struggle.

On a different page, ETHUSD rises to the highest levels since August 2022 amid hopes of more inflow due to the Ethereum hard fork. Additionally, BTCUSD also prints mild gains as traders seek alternative investment vehicle to ignore US Dollar pessimism.

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

US ISM Services PMI, ADP Employment numbers are the key

While the US Dollar weakness and downbeat US data are in the center of the market, traders should pay attention to the scheduled US data to aptly forecast Friday’s key jobs report. Should the top-tier numbers arrive firmer, the US Dollar may witness the much-awaited rebound.

May the trading luck be with you!