The Kiwi Flies Higher – Rate Hike Coming?

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NZD/USD, the kiwi, reached new Year to date highs, passing 0.75 at the beginning of the new week. Is the market expecting a rate hike next week?

Forex trading began with new dollar weakness. Many currencies regained against the dollar after losing ground on Friday. Mostof them are currently within levels seen last week: EUR/USD is under 1.50, USD/CHF above 1.0120 (no parity yet), USD/CAD above 1.03, etc. GBP/USD is higher than last week, at 1.6420, but it has already seen those levels not so long ago.

NZD/USD is different – it’s now trading at 0.7530, the highest level since July 2008. Similar to neighbor Australia, the kiwi flies high. The NZD/USD graph is a straight line up in recent months. It seems that nothing can stop it. Not yet. Ironically, the kiwi is a flightless bird.

Rate hike in New Zealand?

Glenn Stevens was the first central bank governor to raise interest rates after the global crisis, making a surprising move by raising the interest rate to 3.25%.

I then asked: which country will follow and raise rates? The immediate suspect, it’s neighbor New Zealand has a rate decision quite soon. On October 28th, next Wednesday, the RBNZ will make a decision about the Official Cash Rate. Currently, estimates are for another month of an unchanged rate of 2.5%.

Will Alan Bollard surprise with a rate hike? We still don’t know what will happen then. We can see what’s happening now – we’re seeing the forex markets pushing forward.

Is the market expecting a rate hike? What do you think?

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About Author

Yohay Elam – Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I’ve accumulated. After taking a short course about forex. Like many forex traders, I’ve earned a significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I’ve worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts.