The biggest gainer so far this morning is the New Zealand dollar (NZD) aka Kiwi. It is up .76% vs. USD and .51% vs. CAD. Part of the reason for this is that at 3pm EST today, New Zealand will have their interest rate decision. It is expected that they will remain at 2.5%, but don’t rule out a hike.
Australia will be announcing their employment figures this evening, which are expected to be robust. The Aussie has maintained strength as the Australia economy has exited recession (if they actually were in one to begin with, which is debatable) and they have been the only major economy to have raised interest rates this year.
There is a tentative link between the New Zealand and Australian economies, though based more on geography than actual output measures. So while a rate hike is improbable, it is not completely off the table.
Let’s take a look at the 4 hour chart of NZD/USD: (click chart to enlarge)
Just looking at the chart, it looks like the pair could trade up to the .7175 level. In the event of a rate hike, I would expect the pair to move swiftly through that level. If there is no hike, then its possible that the pair will resume the trend down.
As of right now, both the Kiwi and the Aussie are bucking the normal risk trade, trading up vs. the USD dollar even though US stocks are down slightly this morning.
With both gold and oil up, I expect we may see a stock market reversal some today if the US dollar remains week.
So keep an eye out for 3pm EST to see what happens with NZD!
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