The strength of the Oceanian currency
2024-03-01
■ Since the end of 2023, the Australian dollar has fallen 4.6% against the US dollar and 3.6% against the New Zealand dollar, a particularly significant depreciation of the Australian dollar
■ Given the sluggish pace of economic recovery, it is worth noting the indicators released in March to monitor whether the current depreciation of the Australian dollar and the appreciation of the New Zealand dollar will reverse
The Federal Reserve's (FRB) wait-and-see for an early rate cut has weakened, with the US dollar index rising by about 2.6% since the end of last year. In contrast, the Australian dollar fell 4.6% against the US dollar and the New Zealand dollar fell 3.6% against the US dollar (as of the close on December 29, 2023). From the reflection of the start time of interest rate cuts in the short-term money market, the probability of FRB cutting rates in June is slightly higher than 60%, while the probability of cutting rates in July is over 80%, with a significant degree of delay since the end of last year. On the other hand, the probability of a rate cut by the Reserve Bank of Australia (RBA) in August is slightly higher than 60%, while the probability of a rate cut in September is slightly higher than 70%. The probability of a rate cut by the Reserve Bank of New Zealand (RBNZ) in October is slightly lower than 40%, while the probability of a rate cut in November is 100%.
The January Australian Consumer Price Index (CPI) announced yesterday showed a two-year low growth, and market expectations for further interest rate hikes have weakened. Although the Reserve Bank of New Zealand (RBNZ) held the policy rate unchanged at yesterday's monetary policy committee meeting, it lowered its expected final hit point for the policy rate due to the inflation risk balance. Although the RBNZ governor stated in a radio interview this morning that he is confident that the inflation rate will return to the target range (1-3%) by the second half of 2024 and near the median (2.0%) by 2025, his view on the tightening stance seems to have weakened compared to before. In the context of constrained employment improvement in both countries, people will pay more attention to inflation indicators after the quarter of January to March.
The slow pace of economic recovery in Australia and New Zealand is also one of the reasons for the strengthening downward trend of the Australian and New Zealand dollars. The signs of declining retail sales in both countries indicate a slowdown in personal consumption growth. Australia is expected to announce on March 6th, while New Zealand is expected to announce on March 21st that the actual GDP for the October to December quarter of last year will slow down from the previous quarter. Australian Finance Minister Charles warned in this morning's Australian newspaper that the quarterly GDP for October to December of last year, which will be announced next week, will be very weak. The AUD/AUD reached a 9-month low on the 22nd, rebounding to the latter half of 1.05 NZD/AUD. However, with technical support from 1.07 NZD/AUD, the AUD is expected to bottom out and rebound.
■ Given the sluggish pace of economic recovery, it is worth noting the indicators released in March to monitor whether the current depreciation of the Australian dollar and the appreciation of the New Zealand dollar will reverse
The Federal Reserve's (FRB) wait-and-see for an early rate cut has weakened, with the US dollar index rising by about 2.6% since the end of last year. In contrast, the Australian dollar fell 4.6% against the US dollar and the New Zealand dollar fell 3.6% against the US dollar (as of the close on December 29, 2023). From the reflection of the start time of interest rate cuts in the short-term money market, the probability of FRB cutting rates in June is slightly higher than 60%, while the probability of cutting rates in July is over 80%, with a significant degree of delay since the end of last year. On the other hand, the probability of a rate cut by the Reserve Bank of Australia (RBA) in August is slightly higher than 60%, while the probability of a rate cut in September is slightly higher than 70%. The probability of a rate cut by the Reserve Bank of New Zealand (RBNZ) in October is slightly lower than 40%, while the probability of a rate cut in November is 100%.
The January Australian Consumer Price Index (CPI) announced yesterday showed a two-year low growth, and market expectations for further interest rate hikes have weakened. Although the Reserve Bank of New Zealand (RBNZ) held the policy rate unchanged at yesterday's monetary policy committee meeting, it lowered its expected final hit point for the policy rate due to the inflation risk balance. Although the RBNZ governor stated in a radio interview this morning that he is confident that the inflation rate will return to the target range (1-3%) by the second half of 2024 and near the median (2.0%) by 2025, his view on the tightening stance seems to have weakened compared to before. In the context of constrained employment improvement in both countries, people will pay more attention to inflation indicators after the quarter of January to March.
The slow pace of economic recovery in Australia and New Zealand is also one of the reasons for the strengthening downward trend of the Australian and New Zealand dollars. The signs of declining retail sales in both countries indicate a slowdown in personal consumption growth. Australia is expected to announce on March 6th, while New Zealand is expected to announce on March 21st that the actual GDP for the October to December quarter of last year will slow down from the previous quarter. Australian Finance Minister Charles warned in this morning's Australian newspaper that the quarterly GDP for October to December of last year, which will be announced next week, will be very weak. The AUD/AUD reached a 9-month low on the 22nd, rebounding to the latter half of 1.05 NZD/AUD. However, with technical support from 1.07 NZD/AUD, the AUD is expected to bottom out and rebound.