Kiwi jumps as RBNZ hints at rate hikes in 2022
The New Zealand dollar rose sharply after the hawkish statement by the Reserve Bank of New Zealand. The bank concluded its two-day meeting today and hinted that it will start tightening in the coming year. It left the official cash rate unchanged at 0.25%, where it has been in the past few months. The bank also hinted that it would maintain its limit of asset purchases to NZ$100 billion. The bank becomes the third major central bank after the Bank of England, Bank of Canada, and Norges Bank to hint that it will start to wind down its pandemic response tools. Earlier on, data by Statistics New Zealand revealed that the country’s trade surplus widened to almost N$400 million. This happened after its exports fell to N$5.37 billion while its imports fell to N$4.9 billion.
Global stocks rallied today after the Federal Reserve hinted that it will not tweak interest rates even as the US economic situation improved. In Germany, the DAX index rose to 15,470 euros while in France, the CAC 40 index rose to 6,400 euros. In the United States, futures tied to the Dow Jones rose by 80 points while those linked to the S&P 500 and Nasdaq 100 index rose by 40 points. At the same time, the 10-year bond yield dropped to 1.567% while the 30-year yield fell to 2.257%. This is a sign that investors are believing that the Fed will not hike interest rates or taper conditions any time soon even as inflation has risen and home prices have jumped to the highest level in 15 years.
The cryptocurrency rally continued as investors continued to buy the dips. The price of Bitcoin crossed the $40,000 milestone for the first time since Friday last week while Ether rose to $2,850. Other altcoins like Binance Coin, Cardano, and Polkadot also rallied. This performance is partly because fears of inflation have eased and that many investors rushed to buy the dips as the price declined sharply last week. Also, the prices have jumped because of the strong demand for Bitcoin from institutional investors.
The ETH/USD pair rose to an intraday high of 2,855 as the rest of the cryptocurrency prices rallied. On the hourly chart, the pair managed to move above the 38.2% Fibonacci retracement level. It has also risen above the ascending trend that is shown in pink and the 25-day exponential moving average. The bears power has also moved above the neutral line while the Relative Strength Index (RSI) has moved close to the overbought level of 70. Therefore, the pair may keep rising with the next target being the 50% retracement at 3,150.
The NZD/USD pair rose to a high of 0.7317, which was the highest level in several months. The pair managed to move above the important resistance level at 0.7300. It also rose above the 25-day and 50-day moving average while the signal and main line of the MACD moved above the neutral line. The pair has also moved above the ascending pink trendline. Therefore, the pair may keep rising as traders target 0.7400.
The EUR/USD pair declined to an intraday low of 1.2242 in a day when focus was on the Fed statement on rates. On the hourly chart, the pair seems like it has formed a double-top pattern, which is usually a bullish signal. It is also attempting to move below the important support at 1.2242 while the Relative Strength Index (RSI) has started to form a bearish divergence pattern. Therefore, the pair may keep falling as bears target the lower side of the ascending trendline at 1.2200.