The New Zealand Dollar (NZD) trades in positive territory for the third consecutive day on Tuesday.
The New Zealand Dollar gains momentum in Tuesday’s early Asian session. The positive risk sentiment weighs on the US Dollar and lifts NZD/USD. Investors await the PBoC rate decision ahead of Fedspeak on Tuesday. The New Zealand Dollar trades in positive territory for the third consecutive day on Tuesday. The risk-on sentiment in global markets and easing geopolitical risks in the Middle East continue to undermine the Greenback.
Governor Adrian Orr said on Monday that he is more convinced that inflation has returned to the 1-3% target area, boosting the likelihood of more rate reductions in the future. Looking ahead, investors will keep an eye on the People’s Bank of China’s Interest Rate Decision, along with the Fed’s Raphael Bostic and Michael Barr speeches on Tuesday. On Friday, New Zealand’s Retail Sales data and Fed Chair Powell's speech at the Jackson Hole symposium will be in the spotlight.
impact the New Zealand Dollar? The Reserve Bank of New Zealand aims to achieve and maintain an inflation rate between 1% and 3% over the medium term, with a focus to keep it near the 2% mid-point. To this end, the bank sets an appropriate level of interest rates. When inflation is too high, the will increase interest rates to cool the economy, but the move will also make bond yields higher, increasing investors’ appeal to invest in the country and thus boosting NZD. On the contrary, lower interest rates tend to weaken NZD. The so-called rate differential, or how rates in New Zealand are or are expected to be compared to the ones set by the US Federal Reserve, can also play a key role in moving the NZD/USD pair.
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