After a slow start to the week the New Zealand Dollar (NZD) has gained on the US Dollar (USD) showing 0.6295 on the chart midday Friday in what has been a wild ride. The Federal Reserve continued its reversal of “easy money policy” yesterday raising their key interest rate 75 points to 2.50% in a unanimous decision by the 12 Fed members as efforts ramp up to bring down 40-year high inflation. The Fed hasn’t raised by 75 points since 1994 saying there are obvious signs of the economy slowing since last month’s meeting. Earlier speculation after the inflation ballooned to 9.1% in June y/y were that the Fed may raise a whole 1% but with a slowing economy this may have been a wise move not to be as aggressive. The Fed will raise again in September with odds at 62% for 50 points versus 33% for a 25-point move. Next week’s NZ jobs numbers and US NFP- Non-Farm Payroll will be key. On the chart we have a couple of Fibonacci 50% retracement patterns lining up. The most significant is the potential downside move from 0.6310 based on the high at 0.6570 and the low of 0.6060 offering damn good resistance. Something to consider as the NZD has an overbought feel to it.
The current interbank midrate is: NZDUSD 0.6293
The interbank range this week has been: NZDUSD 0.6191- 0.6299