- NZD/USD receives upward gains as the US Dollar declines.
- Fed is expected to reduce 85 bps rate cuts in 2024.
- RBNZ could keep its OCR unchanged at 5.50% in Wednesday's meeting.
NZD/USD recovers its recent losses registered in the previous session. The NZD/USD pair trades higher near 0.6100 during the early European session on Tuesday. The strength of the New Zealand Dollar (NZD) against the US Dollar (USD) is further bolstered by the subdued performance of the US Dollar (USD). This comes in the wake of expectations that the US Federal Reserve (Fed) is nearing the end of its monetary rate hike cycle, coupled with the anticipation of almost 85 basis points of interest rate cuts by the Fed in the coming year.
Reserve Bank of New Zealand (RBNZ) will release a monetary policy decision on Wednesday. Expectations are that the RBNZ will maintain its Overnight Cash Rate (OCR) at 5.50% for the fourth consecutive meeting, with some speculation about a potential future rate cut.
Additionally, the recent Chinese stimulus plan aimed at boosting the property sector is providing support to the New Zealand Dollar (NZD), which often acts as a China-proxy currency.
US Dollar Index (DXY) hovers around 103.20 with a negative bias. US Census Bureau revealed a significant 5.6% drop in New Home Sales for October, falling to 679K and missing the market expectation of 725K. This data, coupled with a dip in US Treasury yields, continues to drive the prevailing trend toward the downside for the US Dollar.
Looking ahead to Tuesday, the focus remains on the United States, with the release of the Housing Price Index and CB Consumer Confidence. Additionally, insights from Federal Reserve (Fed) officials are expected, providing a comprehensive view of the economic landscape.
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