NZD/USD: Volatility beckons in a usually positive month for the Kiwi – ANZ

The Kiwi ended the week back above 0.64, and while it didn’t reclaim Monday’s highs, it’s still the best-performing G10 currency month to date. Economists at ANZ Bank expect volatility this week.

NZD seasonality is usually positive in December

“NZD seasonality is usually positive in December, but while it has that and higher interest rates in its corner, there are no guarantees that it will finish this week un-bruised, with several central bank meetings due.”

“Volatility beckons ahead of the Fed meeting, which is expected to be hawkish, with a 50 bps hike and a much higher terminal rate (2023) ‘dot plot’. Our chief concern is what this might do to the USD, which has come under pressure as the trendy ‘pivot’ narrative has taken hold, despite clear signs of sticky US inflation.”

“NZ factors will also play a role, with the HYEFU and GDP due this week, but they’re likely to play second fiddle to volatility and the global vibe (again!).”