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NZD/USD Rate Rebound Unravels Ahead of Federal Reserve Rate Decision

NZD/USD Rate Rebound Unravels Ahead of Federal Reserve Rate Decision
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New Zealand Dollar Forecast: NZD/USD Up on Sentiment Recovery, OCR Bets

New Zealand Dollar Forecast: NZD/USD Up on Sentiment Recovery, OCR Bets 2021-07-21 23:00:00 Thomas Westwater, Analyst New Zealand Dollar, NZD/USD, AUD/NZD, Covid, Risk Trends, RBNZ - Talking Points New Zealand Dollar gains against most peers as global sentiment recovers RBNZ interest rate bets swing higher as Covid-related growth worries subside NZD/USD bounce puts psychological level back in focus as potential resistance Thursday’s Asia-Pacific Outlook Asia-Pacific traders will look to build on Wall Street’s upbeat session where stocks closed higher, extending a rebound into its second day after a broad risk-off move sank markets on Monday. The benchmark S&P 500 closed 0.82% higher on Wednesday, moving the index within 1% of last week’s all-time high. The foreign exchange market is reflecting the new round of buying, with the risk-sensitive New Zealand Dollar gaining against most of its major currency peers.

Are higher interest rates coming? Maybe, but not definitely

But it is drawing a long bow to assume that interest rates will rise very much. And it is fighting history to assume they will stay high for long. Why? Because while New Zealand has had a spike in inflation, the rest of the world is experiencing the opposite. Covid variants are causing economies to go back into lockdowns, tempering the optimism that came with more widely available vaccinations. Lumber prices have collapsed recently, and supply bottlenecks for computer chips seem to be freeing up, bringing prices down. Accordingly, central banks globally are giving few signals that interest rates will rise any time soon. Ten-year interest rates in the US have fallen 40 per cent recently.

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