NZD/USD faces bearish pressure as the DXY reaches 103.06 and markets weigh the potential for a 50bp Fed hike in December, despite current CME FedWatch data showing only 10% probability for such a move.
Fed Governor Waller's hawkish comments (9/10 FXS Speechtracker score vs 7.3/10 average) revived the prospect of a 50bp December hike if October core CPI prints at 0.3% or higher, pushing front-end yields higher and the DXY up 0.18% to 103.06, an 18-month high. The FXS Fed Sentiment Index rose 3.17 points to 145.50, firmly hawkish. Only 10% odds of the 50bp hike per CME FedWatch cap the upside.
NZD/USD holds two days of losses near 0.5560 as markets start pricing a possible 50bp Fed hike in December after Waller's hawkish comments (9/10 FXS Speechtracker score), pushing the DXY up 0.18% to 103.06, an 18-month high. The pair trades below the 20-day EMA at 0.5618 with RSI near 39, confirming a bearish bias. A hawkish RBNZ expected to hike 25bp to 3% in December partially cushions the downside.
The New Zealand Dollar remains under pressure, trading near 0.5560 as the US Dollar strengthens to an 18-month high of 103.06. Market sentiment has shifted following hawkish comments from Fed Governor Waller, who suggested a 50 basis point rate hike in December is possible if October core CPI prints at 0.3% or higher.
Fed Governor Waller's hawkish comments on Tuesday revived the possibility of a 50 basis point rate hike at the December meeting if October core CPI comes in at 0.3% or higher, lifting the Dollar Index 0.18% to around 103.06, its highest in over 18 months.
According to the CME FedWatch tool cited in the article, the odds of a 50 basis point hike at the December meeting are just 10%, though the debate itself has pushed yields and the Dollar higher.
The US Dollar is strengthening because Fed official Waller suggested a half-point December rate hike may be warranted if October core CPI comes in at 0.3% or higher, and the Dollar Index has reached its highest level in over 18 months at around 103.06.
The Reserve Bank of New Zealand is expected to raise its Official Cash Rate by 25 basis points to 3% at its December meeting, which supports the New Zealand Dollar, but markets currently see only a 10% chance the Fed actually delivers a 50bp hike, limiting the pressure.