Australian And New Zealand Dollars Stay Strong Ahead Of Central Banks’ Meeting
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The New Zealand and Australian dollars were calm as central banks plan meeting this week to deliberate on interest rates. The meetings could signal the end of the global campaign on tightening, which could offer some relief for low-performing currencies.
The Reserve Bank Could Maintain Its Correct Rate
Last week, the Aussie hit a high of $0.6474 after a 0.8% surge from $0.6344. This comes barely two weeks after the currency hit its lowest level at $0.6358 this year. The Aussie is now climbing back, although it has failed to rise above the $0.6480 mark.
At $0.5912, the Kiwi dollar was performing more than expected and doing strong after gaining 0.3% last week. The currency had near-term resistance at $0.5920 after reaching its lowest this year at $0.5860.
Both currencies were generally rangebound in thin liquidity on Monday. This comes after a considerably steady performance last week following slight optimism that their most significant trading partner, China, may have passed its worst economic slowdown.
The US Federal Reserve could be focusing on updated rates and economic projections, even though it’s almost certain that the current rate will likely not change.
According to analysts at Barclays Bank, the Federal Open Market Committee is expected to maintain its tight interest rate rules.
It could keep the rate projections the same this year while revising the rates for next year. The predictions for next year could witness a few cuts in the interest rate after the central bank meetings this week.
“We think the FOMC will remain sceptical that it has already reached a level of rates that is sufficiently restrictive,” the analysts added.
The Reserve Bank Has Left Its Rate Unchanged For Three Months
Some factors have been blamed for this level of scepticism in the market, including a slow disinflation rate, a slightly tight labor market, and a re-acceleration in consumption in July. The central banks are now looking to hold a series of meetings to see the maintenance of interest rates while projecting a slight update next year.
On Thursday, the Reserve Bank of England will make the minutes of its Meeting in September available to the public. Ahead of this, the market is in an expectant mood after the Reserve Bank has left the interest rates unchanged for three months. The market is also looking at a more relaxed campaign from the Reserve Bank.
