- NZD/USD looks to Aussie for clues ahead of key events.
- The focus will be on the RBA’s minutes and the Fed Chair’s testimony.
The New Zealand dollar fell to a low of 0.6101 on Monday and is currently down 0.5% at 0.6200 after hitting a three-week high last week.
Markets are expecting plenty of domestic economic data this week, including New Zealand’s trade balance for May and Reserve Bank of Australia minutes.
The US dollar rose last week and on consecutive Mondays Monetary Policy decisions of central banks. In this regard, Federal Reserve Chairman Powell will submit a semiannual policy report to Congress. He is expected to reiterate that the committee is likely to favor higher interest rates this year.
“Note that despite this report, the FOMC decided to hold off on rate hikes in June, and we are of the view that they are unlikely to raise them again in the context of easing inflation in June-August,” analysts at TD Securities said. .
The dollar indexThe DXY, which measures the U.S. currency against six major peers, rose 0.3% to 102.55, just shy of a one-month low of 102.00 touched on Friday.
AUD leads kiwi higher
AUD is a top player and helps support the Kiwis. A recent surprise rate hike by the Reserve Bank of Australia helped boost the Antipodeans. In addition, the release of Australia’s stellar jobs report also hints at further policy moves that may help propel Bird higher.
As for the RBA, the minutes will be published this week and analysts at TD Securities explained that “in the June statement, the bank dropped the ‘medium-term inflation expectations remain well anchored’, which seems hawkish to us, and we can expect a lively discussion.” References to the impact of a 5+% increase in the minimum wage on wages view will be closely watched as recent strong job gains push the odds of another hike higher in July due to the risk of increased wage pressures.”
As for the Reserve Bank of New Zealand, the central bank ”is a strong proponent of upfront rate hikes and was the first ever G10 central bank to start a rate hike cycle,” Rabobank analysts added. ”Bad weather and teacher strikes have recently added to the impact of tighter credit conditions.”