Antipodean currencies are the best performing majors this year. AUD is trading almost 3.7% year-to-date higher against USD while NZD gained over 3.4%. NZD may be set to gain further as market odds for a rate hike jumped following the latest move from the New Zealand government.
The New Zealand government ordered the Reserve Bank of New Zealand to take the housing market into consideration while making monetary policy decisions. Housing prices in New Zealand are running rampant after RBNZ slashed interest rates to record low levels. In turn, market participants viewed the requirement to take the housing market into consideration as a potential signal that rate hike may be coming. However, RBNZ Governor Orr claims that such expansion to the Bank's mandate will make it harder to deliver on other two targets - inflation and employment.
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Open account Try demo Download mobile app Download mobile appHousing prices are rising quickly in many developed economies so the question is whether other governments and central banks will mimic the decision from New Zealand. A point to note is that RBNZ was the first G10 central bank to adopt inflation-targeting in 1990 and most of the world adopted this approach later on.
NZDUSD broke above the resistance at 0.7350 this week and trades 35% above low from March 2020. The next resistance zone to watch ranges above 0.7500 mark and is strengthened by the 61.8% retracement of the downward move started in mid-2014. Weekly chart. Source: xStation5
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