The New Zealand dollar has fallen against the US dollar as interest rates in America have jumped again, mainly due to energy inflation concerns.
NZD/USD
The New Zealand dollar has fallen significantly during the trading session on Thursday as interest rates in the US have climbed. This has put downward pressure on the overall Forex markets, and the US dollar has been the biggest winner in general. As the rates rise, it makes sense that traders will continue to flock to the higher-rate currencies such as the Greenback.
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That being said, this is a market that was in my sights mainly due to the area that we had pulled back from. It was the 200-day EMA and the 0.5850 level. The 0.5850 level is a major area of market memory, and it is also where we had seen the 61.8% Fibonacci retracement level sit as well. In other words, this is a nice technical area for traders to be involved in.
Hawkish Fed Expectations and Yield Differentials Weigh on Kiwi
And with the United States interest rates rising the way they have, that just adds more credence to the idea that the New Zealand dollar may crumble. The Federal Reserve is expected to raise rates later this year, and while the RBNZ has been a little bit more hawkish, the reality is that traders are looking at this through the potential for the Federal Reserve to remain very tight more than anything else. That is one of the biggest moves that you see in the market most of the time: what the Federal Reserve is doing.
The RBNZ, of course, has been hawkish, but at the end of the day, the reality is that the market is likely to continue to look at the global outlook through a grim view, and that hurts commodity currencies such as the New Zealand dollar. Interest rate differentials will continue to be a big factor here.
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