The report on American expenditures and GDP data were readings that most investors were waiting for today. The data turned out to be mixed, which did not strengthen the USD. The weakness of the “greenback” was exploited by the euro and the zloty. In New Zealand, the cost of money was reduced once again.
NZD Strengthening
The Reserve Bank of New Zealand slashed interest rates by 50 basis points today, which was in line with forecasts. The current cost of money is now 4.25%. Interestingly, after the reduction, the Antipodean currency strengthened. On the USD/NZD and EUR/NZD charts, the “kiwi” more than erased the losses incurred in the first two days of last week. Appreciation of the New Zealand dollar was also visible in relation to the Polish zloty.
So why such a reaction when a lower cost of money (at least in theory) should weaken the currency? Just yesterday, a 75 basis point move was on the table, with a 40% likelihood of happening. Furthermore, Adrian Orr, RBNZ Governor, said that the pace of easing will slow down in 2025 compared to previous assumptions. That’s why, after today’s decision, the image of NZD, which was under a big question mark just yesterday, got warmed up. Investors’ fears considering the possibility of a greater rate cut were dispelled. Moreover, the market received a preview of RBNZ’s less dovish monetary policy next year, despite the fact that decision-makers could afford larger cuts, not least because of the recent drop in consumer inflation to 2.2% Y/Y, which is the lowest level since the second quarter of 2021.
PLN Does Not Surrender Gains
On Wednesday, the national currency is trying to maintain the harvest from this week. The appreciation of the zloty against major currencies was once again supported by good economic indicators. The positive surprise after Monday’s increase in industrial production and Tuesday’s retail sales was accompanied by a decline in unemployment on Wednesday. The rate, contrary to market expectations, fell to 4.9% instead of staying at a round 5%. Although the reduction might seem small, this is the third positive aspect this week that impacts the national currency positively. The EUR/PLN rate at 3:00 pm is just under 4.31 PLN. Furthermore, USD/PLN quotations fell below 4.08 PLN. Apart from domestic economic data, the zloty was once again supported by developments in the EUR/USD pair where the euro is strengthening against the dollar. The main driver of the morning gains of the Union currency were comments from Isabell Schabel of the ECB, who expressed skepticism about a 50 basis point cut in the cost of money in the Eurozone.
Americans Begin Celebrating Without Fireworks
Afternoon data from the United States did not strengthen the American currency. Annualized GDP turned out to be as expected, at 2.8%. Quarter-over-quarter core inflation slipped to 2.1% (consensus 2.2%), while unemployment claims (213,000) were close to expectations. Following mixed data, world’s leading currency pair quotations moved northward, breaking yesterday’s peak of 1.054 USD, which implies further weakening of the dollar against the euro. The external environment shaped in this way also simultaneously supported the zloty, which since morning has been fighting to maintain gains against major currencies. Tomorrow the US celebrates Thanksgiving, so Thursday’s session will proceed without Americans, which favors the Union currency.
Author: Dawid Górny, currency analyst at Walutomat.pl.
Source: https://managerplus.pl/mieszane-dane-z-usa-mocne-euro-i-zloty-zaskakujaca-sila-nzd-po-obnizce-stop-44541
