Date: 28th February 2024.
RBNZ Says No More Hikes, NZD Crashes More Than 1%!
The New Zealand Dollar is witnessing the highest level of volatility during this morning’s Asian session. The lowest spreads and strongest price movement can be seen on the NZDUSD. The exchange rate is trading at its lowest price since February 16th after the NZD collapsed. Over the past 12 hours, the NZDUSD has fallen 1.11% primarily due to the dovish tone taken by the Reserve Bank of New Zealand and its Governor.
If we look at the 10 most traded currencies worldwide, New Zealand is the country witnessing the highest inflation and the weakest economic growth. The dovish tone taken by the RBNZ comes as a relief for locals and can support the economy. However, for the currency this simply adds more pressure. Economic weakness can primarily be seen in the New Zealand employment sector which has seen the unemployment rate rise from 3.2% to 4.00%. In addition to this, the Gross Domestic Product Growth Rate currently stands at -0.6%.
The RBNZ kept interest rates unchanged at 5.50%, but the main concern for investors were the comments made thereafter. The governor Mr Orr in his press conference said “there was very strong consensus that the official rate is sufficient”. As a result, the economy continues to remain unattractive due to weak data and potential for another hike is no longer possible. For this reason, demand has significantly fallen for the time being.
The Dollar on the other hand is seeing demand slightly rise due to poor economic data on Monday. The weaker data triggered a lower risk appetite within the market which supported the Dollar. Investors are now concerned whether the US’s GDP figure will indeed read +3.3% as per expectations considering certain data came in relatively weak. The Durable Goods Order fell 6.1%, Core Durable Goods fell -0.3% and the CB Consumer Confidence fell instead of remaining unchanged at 114.8. Throughout the remaining sessions, the price will continue to be influenced by the comments from the RBNZ, but also will depend on the Prelim GDP reading for the US this afternoon.
In terms of technical analysis, almost all indicators point towards a downward price movement which is understandable considering the bearish momentum. However, all timeframes below the 4-hour chart are currently reading oversold on the RSI. Investors should also take this into account.
USA100
The NASDAQ was the best performing index on Monday, but there continues to be a lack of bullish signals in the short term. The USA100’s price continues to remain above the 75-bar moving average and above the neutral level on most oscillators. However, the price is not maintaining bullish momentum and is failing to form higher highs. The price also continues to trade at the previous resistance level and many economists advise the price is trading at where traders believe is appropriate, hence the lack of a trend.
When we monitor the top 20 most influential stocks, 11 of the 20 ended the day higher while 9 declined. This is also an indication of no major trend within the session. From these 20 stocks, Netflix saw the largest increase (+2.39%) and Adobe saw the largest decline (1.43%).
So far, Bond Yields trade lower, which is known to support the stock market, however, the Dollar also trades higher which indicates lower investor sentiment. The next price driver for the USA100 will be the US GDP reading. Ideally investors will want to see strong growth but not strong enough to stop the Fed from cutting rates soon. Some economists are advising a GDP reading of 3.3% or slightly lower will be ideal for the stock market.
Always trade with strict risk management. Your capital is the single most important aspect of your trading business.
Please note that times displayed based on local time zone and are from time of writing this report.
Click HERE to access the full HFM Economic calendar.
Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work. Click HERE to register for FREE!
Click HERE to READ more Market news.
Michalis Efthymiou
Market Analyst
HFMarkets
Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
-----------------------------------------------------------------------------------------------------------------
Date: 29th February 2024.
The Japanese Yen Soars After The BOJ Indicate Interest Rate Hikes!
Many investors are looking to take advantage of the first clear indication that the Bank of Japan will look to take a more traditional stance on its policy. In other words, move away from negative interest rates. The Bank of Japan moved to negative interest rates in 2016 and since then the Yen has declined by 25% against the US Dollar and 40% against the Swiss Franc. The exchange rate is now trading at strong resistance levels from November 2023 and October 2022. However, the question now is if investors will continue investing in the Japanese Yen in the longer term?
The Yen’s advantages are its safe haven status and ability to mitigate risk away from the Dollar. Investors also note its current price is at an extremely “cheap” level compared to other options. For this reason, economists are evaluating whether investors will look to buy the Yen for the long-term considering the Bank of Japan may soon exit negative rates.
A key member of the Board of the Bank of Japan, Mr Takata, said to journalists, “It’s necessary to consider taking a nimble and flexible response, including on how to exit, or shift gear from the current extremely accommodative monetary policy”. Based on this, investors should not believe the BoJ will suddenly go on a hiking rampage or start hiking imminently. However, Mr Takata gave the first clear signal that the regulator will start hiking in 2024 to at least move away from negative rates.
Due to this the Japanese Yen rises against all currencies this morning and Japan’s 2-Year Bond Yield again renews its highs. The 2-Year Bond Yield now trades at 0.185% which is its highest level since 2011. The higher bonds yields can also support the currency and global interest in Japan’s Financial Service Market.
In addition to this, the Yen has also obtained further support from economic data this morning. Japan’s Retail Sales figure read 2.3%, higher than the 2.00% prediction. In addition to this, the Core CPI remained at 2.6%, again higher than expectations.
In terms of the US Dollar, the currency came under strain during the US Trading Session but kept to its previous price range. The currency came under slight pressure due to the Gross Domestic Product underachieving. The GDP data read 3.2% versus the 3.3% expected, however, investors should note the growth rate remains competitive. Investors are now mainly focusing on the PCE Price Index, which is a favourite of the Federal Open Market Committee. If the Index reads higher than 0.4%, rate cuts will start to feel like a far distance away. As a result, the Dollar potentially can rise, and stocks could possibly decline in the short to medium term.
USA100 – All Eyes On Today’s PCE Core Price Index
The NASDAQ continues to struggle for a fourth day as investors remain unsure on the future path of interest rates. In addition to this, investors should also note the weakness may partially be related to the end of the earnings season and due to its current high price.
The day’s price movement is likely to largely be dependent on today’s PCE Core Price Index. Analysts expect the index to read 0.4% which would be the highest since May 2023. If the index reads higher the USA100 can potentially experience significant pressure as interest rate cuts will seem a distant dream. However, if the data is lower, investors will be relieved and may re-enter at the current lower price.
Technical indicators’ signals are currently at the “neutral” level but are close to signalling a sell if the price continues to decline below $17,810. Lastly, investors will also be monitoring the performance of individual stocks within the NASDAQ. Of the top 30 influential stocks, only 3 rose in value on Wednesday indicating a clear downward trend for the day.
Always trade with strict risk management. Your capital is the single most important aspect of your trading business.
Please note that times displayed based on local time zone and are from time of writing this report.
Click HERE to access the full HFM Economic calendar.
Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work. Click HERE to register for FREE!
Click HERE to READ more Market news.
Michalis Efthymiou
Market Analyst
HFMarkets
Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
RBNZ Says No More Hikes, NZD Crashes More Than 1%!
- The Reserve Bank of New Zealand takes a more dovish tone as the economy’s cracks start to show.
- The New Zealand Dollar declines against all currencies. Against the Pound the NZD trades 0.83% lower and it has fallen more than 1.00% against the Dollar.
- The US Dollar Index trades 0.20% higher as investors take a more cautious approach due to weaker economic data.
- US Durable Goods Orders decline more than 6.00%, the largest contraction since May 2020.
The New Zealand Dollar is witnessing the highest level of volatility during this morning’s Asian session. The lowest spreads and strongest price movement can be seen on the NZDUSD. The exchange rate is trading at its lowest price since February 16th after the NZD collapsed. Over the past 12 hours, the NZDUSD has fallen 1.11% primarily due to the dovish tone taken by the Reserve Bank of New Zealand and its Governor.
If we look at the 10 most traded currencies worldwide, New Zealand is the country witnessing the highest inflation and the weakest economic growth. The dovish tone taken by the RBNZ comes as a relief for locals and can support the economy. However, for the currency this simply adds more pressure. Economic weakness can primarily be seen in the New Zealand employment sector which has seen the unemployment rate rise from 3.2% to 4.00%. In addition to this, the Gross Domestic Product Growth Rate currently stands at -0.6%.
The RBNZ kept interest rates unchanged at 5.50%, but the main concern for investors were the comments made thereafter. The governor Mr Orr in his press conference said “there was very strong consensus that the official rate is sufficient”. As a result, the economy continues to remain unattractive due to weak data and potential for another hike is no longer possible. For this reason, demand has significantly fallen for the time being.
The Dollar on the other hand is seeing demand slightly rise due to poor economic data on Monday. The weaker data triggered a lower risk appetite within the market which supported the Dollar. Investors are now concerned whether the US’s GDP figure will indeed read +3.3% as per expectations considering certain data came in relatively weak. The Durable Goods Order fell 6.1%, Core Durable Goods fell -0.3% and the CB Consumer Confidence fell instead of remaining unchanged at 114.8. Throughout the remaining sessions, the price will continue to be influenced by the comments from the RBNZ, but also will depend on the Prelim GDP reading for the US this afternoon.
In terms of technical analysis, almost all indicators point towards a downward price movement which is understandable considering the bearish momentum. However, all timeframes below the 4-hour chart are currently reading oversold on the RSI. Investors should also take this into account.
USA100
The NASDAQ was the best performing index on Monday, but there continues to be a lack of bullish signals in the short term. The USA100’s price continues to remain above the 75-bar moving average and above the neutral level on most oscillators. However, the price is not maintaining bullish momentum and is failing to form higher highs. The price also continues to trade at the previous resistance level and many economists advise the price is trading at where traders believe is appropriate, hence the lack of a trend.
When we monitor the top 20 most influential stocks, 11 of the 20 ended the day higher while 9 declined. This is also an indication of no major trend within the session. From these 20 stocks, Netflix saw the largest increase (+2.39%) and Adobe saw the largest decline (1.43%).
So far, Bond Yields trade lower, which is known to support the stock market, however, the Dollar also trades higher which indicates lower investor sentiment. The next price driver for the USA100 will be the US GDP reading. Ideally investors will want to see strong growth but not strong enough to stop the Fed from cutting rates soon. Some economists are advising a GDP reading of 3.3% or slightly lower will be ideal for the stock market.
Always trade with strict risk management. Your capital is the single most important aspect of your trading business.
Please note that times displayed based on local time zone and are from time of writing this report.
Click HERE to access the full HFM Economic calendar.
Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work. Click HERE to register for FREE!
Click HERE to READ more Market news.
Michalis Efthymiou
Market Analyst
HFMarkets
Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
-----------------------------------------------------------------------------------------------------------------
Date: 29th February 2024.
The Japanese Yen Soars After The BOJ Indicate Interest Rate Hikes!
- The Japanese Yen witnesses its strongest gains since December 2023. The USDJPY drops more than 0.70% within the first few hours of trading.
- Japanese Yen is largely being driven by comments made by a key member of the Bank of Japan.
- The Bank of Japan advise they are considering taking small steps away from negative interest rates.
- US stocks decline away from the latest resistance level and trade 0.87% lower by end of day.
Many investors are looking to take advantage of the first clear indication that the Bank of Japan will look to take a more traditional stance on its policy. In other words, move away from negative interest rates. The Bank of Japan moved to negative interest rates in 2016 and since then the Yen has declined by 25% against the US Dollar and 40% against the Swiss Franc. The exchange rate is now trading at strong resistance levels from November 2023 and October 2022. However, the question now is if investors will continue investing in the Japanese Yen in the longer term?
The Yen’s advantages are its safe haven status and ability to mitigate risk away from the Dollar. Investors also note its current price is at an extremely “cheap” level compared to other options. For this reason, economists are evaluating whether investors will look to buy the Yen for the long-term considering the Bank of Japan may soon exit negative rates.
A key member of the Board of the Bank of Japan, Mr Takata, said to journalists, “It’s necessary to consider taking a nimble and flexible response, including on how to exit, or shift gear from the current extremely accommodative monetary policy”. Based on this, investors should not believe the BoJ will suddenly go on a hiking rampage or start hiking imminently. However, Mr Takata gave the first clear signal that the regulator will start hiking in 2024 to at least move away from negative rates.
Due to this the Japanese Yen rises against all currencies this morning and Japan’s 2-Year Bond Yield again renews its highs. The 2-Year Bond Yield now trades at 0.185% which is its highest level since 2011. The higher bonds yields can also support the currency and global interest in Japan’s Financial Service Market.
In addition to this, the Yen has also obtained further support from economic data this morning. Japan’s Retail Sales figure read 2.3%, higher than the 2.00% prediction. In addition to this, the Core CPI remained at 2.6%, again higher than expectations.
In terms of the US Dollar, the currency came under strain during the US Trading Session but kept to its previous price range. The currency came under slight pressure due to the Gross Domestic Product underachieving. The GDP data read 3.2% versus the 3.3% expected, however, investors should note the growth rate remains competitive. Investors are now mainly focusing on the PCE Price Index, which is a favourite of the Federal Open Market Committee. If the Index reads higher than 0.4%, rate cuts will start to feel like a far distance away. As a result, the Dollar potentially can rise, and stocks could possibly decline in the short to medium term.
USA100 – All Eyes On Today’s PCE Core Price Index
The NASDAQ continues to struggle for a fourth day as investors remain unsure on the future path of interest rates. In addition to this, investors should also note the weakness may partially be related to the end of the earnings season and due to its current high price.
The day’s price movement is likely to largely be dependent on today’s PCE Core Price Index. Analysts expect the index to read 0.4% which would be the highest since May 2023. If the index reads higher the USA100 can potentially experience significant pressure as interest rate cuts will seem a distant dream. However, if the data is lower, investors will be relieved and may re-enter at the current lower price.
Technical indicators’ signals are currently at the “neutral” level but are close to signalling a sell if the price continues to decline below $17,810. Lastly, investors will also be monitoring the performance of individual stocks within the NASDAQ. Of the top 30 influential stocks, only 3 rose in value on Wednesday indicating a clear downward trend for the day.
Always trade with strict risk management. Your capital is the single most important aspect of your trading business.
Please note that times displayed based on local time zone and are from time of writing this report.
Click HERE to access the full HFM Economic calendar.
Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work. Click HERE to register for FREE!
Click HERE to READ more Market news.
Michalis Efthymiou
Market Analyst
HFMarkets
Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
