Forex News: NZ Dollar Rises Amid RBNZ Rate Hike Prospects

NZ Dollar Rises Amid RBNZ Rate Hike Prospects

(RTTNews) - The New Zealand dollar strengthened against other major currencies in the Asian session on Friday, amid growing expectations of a Reserve Bank of New Zealand (RBNZ) rate hike in the upcoming monetary policy meetings.

Markets currently price in an 85% chance that the RBNZ will increase the Official Cash Rate (OCR) by a quarter-point to 3.0% at the October meeting and a nearly one-in-two chance that it will rise to 3.25% in December.

Traders focus on the preliminary reading of the US S&P Global Purchasing Managers Index (PMI) for October later today.

However, after Federal Reserve (Fed) Chair Kevin Warsh declined to provide a clear indication of when another interest rate increase may occur, traders reduced their bets on a U.S. interest rate hike.

According to the CME FedWatch Tool, markets currently pricing in an 80.5% possibility of a rate hike in December while assigning a 92.8% probability that the Fed would keep interest rates unchanged next week.

Meanwhile, Asian stock markets traded lower on a renewed spike in crude oil prices amid the re-escalation of tensions in the Middle East. Technology and semiconductor stocks also took a hit amid renewed concerns about debt-fueled AI infrastructure spending, with concerns about AI seeming to shift on a daily basis.

The U.S. and Israel are reportedly planning for a joint military operation against Iran after the November midterm elections in the U.S. However, diplomatic efforts to reach an agreement with Iran are ongoing.

The joint operation is set to be a short but intense military action targeting Iran's nuclear facilities, energy infrastructure, and missile and drone capabilities. The two nations have started rehearsing maneuvers.

A spokesperson for Iran's Islamic Revolutionary Guards Corps announced that the country is set to unveil a new weapon, which it termed "Father Of All Bombs" to counter the Pentagon's "Mother Of All Bombs."

Energy-driven inflation worries have taken center stage as a potential Middle East war could disrupt oil and energy trade for an indefinite period.

In the Asian trading today, the NZ dollar rose to 89.50 against the yen, from an early 1-week low of 88.70. The kiwi may test resistance around the 91.00 region.

Against the U.S. and the Australian dollars, the kiwi advanced to 0.5699 and 1.2306 from yesterday's closing quotes of 0.5684 and 1.2349, respectively. If the kiwi extends its uptrend, it is likely to find resistance around 0.58 against the greenback and 1.22 against the aussie.

The kiwi edged up to 1.9679 against the euro, from yesterday's closing value of 1.9764. On the upside, 1.95 is seen as the next resistance level for the kiwi.

Looking ahead, Canada retail and manufacturing sales data for September, U.S. S&P Global PMI reports for October, U.S. University of Michigan consumer sentiment for October and U.S. Baker Hughes rig count data are slated for release in the New York session.

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