On Friday, the New Zealand dollar hit a level that hadn’t been seen in almost two years. This was because people were worried that if central banks tightened money, it could cause a global recession. The NZD/USD currency pair is being traded at 0.5845, which is 0.11% less than its first price.
On Wednesday, the Federal Reserve raised interest rates by 75 basis points and said it was likely to keep tightening. The dot-plot from the Federal Open Market Committee (FOMC) members think the federal funds rate (FFR) will end at around 4.4%.
Forecasts for GDP, PCE, core PCE, and unemployment were changed. Most members thought that GDP would grow by 0.2%, but PCE and core PCE was changed to 5.4% and 4.5%, respectively. The government changed the unemployment rate to 3.8%.
Before Wall Street opened, the Labor Department said that the number of US jobless claims went up by 213,000, which was less than what was expected (217K) but more than the previous number (208K).
The rate on the 10-year benchmark note went up by 14 basis points to 3.714%, but the US Dollar Index went down.
The economic report for New Zealand for Q3 showed that consumer confidence went up from 78.7 to 87.6. Economists at ANZ Bank think that the RBNZ will raise rates by 25 basis points (bps) in February, April, and May. The bank thinks that 4.75 per cent will be the OCR.
The economic calendar for New Zealand is empty, so traders can only look at US data.
The S&P Global Manufacturing report will come out. The Services and Composite Flash PMIs for September, as well as Fed speakers led by Jerome Powell, will get a lot of attention.
Interest rates are going up, but this is mostly balanced out by a tight job market and steady wage growth. A money offset is the low New Zealand dollar.