Forex Today: Hawkish RBNZ Suggests May Even Hike Rates - 22 May 2024

The Reserve Bank of New Zealand maintained its Official Cash Rate at 5.50%, while suggesting that rate cuts will come later than expected or may even be raised first, causing the NZD to gain in value.

  1. The Reserve Bank of New Zealand decided to hold its Official Cash Rate at 5.50% as expected. However, there was a hawkish surprise on policy as the Bank suggested cuts will begin later than currently expected, and that the next move could even be a rate hike.
  2. Major stock market indices are again rising to reach new all-time highs, most notably in the USA where the NASDAQ 100 Index, the S&P 500 Index, and the Dow Jones 30 Index have all made new highs over the past day. Trend traders will look to be in long trades here, while noting the bullish momentum does not seem very strong.
  3. Markets are awaiting the release of FOMC Meeting Minutes later, from the most recent FOMC meeting.
  4. Yesterday’s release of Canadian CPI data came in as expected, with the month-on-month increase falling from 0.6% to 0.5%. Median CPI was slightly lower than expected, giving a very small dovish surprise.
  5. Precious metals have fallen back from their recent new highs, with the past day seeing a decline in Gold but a rise in Silver. However, trend traders will still be looking to be involved on the long side, probably in both metals.
  6. The industrial metal Copper has also declined after reaching a new record high a couple of days ago, and trend traders will remain interested here too. If Copper futures are too big for you, or your broker does not offer a Copper CFD, there is a Copper ETF called Copper.
  7. There will be a release of UK CPI (inflation) data today. A fall in the annualized rate from 3.2% to 2.1% is expected.
  8. In the Forex market, since the Tokyo open, the strongest major currency is the New Zealand Dollar, while the Euro is the weakest. Goldman Sachs are forecasting renewed strength in the US Dollar due to an emerging divergence on monetary policy between the Fed and the central banks of other major global currencies.
  9. Japan’s 10-year government yield has risen to 1%, which is another new 11-year high.
  10. Yesterday the Governor of the Bank of England stated he thought the Bank’s next move on rates will be a cut.

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