At the last RBNZ meeting, the bank took a decidedly hawkish tone. The RBNZ recognises that annual inflation remains too high at 7.2% and it hiked by 75bps to 4.25%. This 75 bps was expected, but the surprise was that the RBNZ now sees itself needing to hike interest rates at a faster pace and considered a 100bps rate hike. This should keep the NZDUSD supported as long as there are reasons for USD weakness.

The US is focused, like most countries on inflation data, if there is a big miss in the US Core PCE today and a big miss in the NFP data tomorrow then it would be reasonable to expect some USD weakness. However, the main event, of course,  will be the Fed decision on December 14.

Over the last 20 years, the NZDUSD has had a bias for strength into the end of the year. It has gained 16 times and only lost value 4 times with an average return of 1.73%.

Major Trade Risks: The major risk here is that US inflation keeps gaining higher, the Fed keeps aggressive and US jobs remain strong which will likely keep the USD bought.

HYCM clients can access the Seasonax product in order to analyse over 25,000 currency pairs, indices, commodities, as well as individual stocks. Please contact your account manager for a free trial. Certain products & services mentioned herein may or may not be available to all clients depending on which HYCM Capital Markets Group entity their trading account(s) adheres to.