After reaching a new year-to-date low once the Fed announced a faster bond taper and the dot-plot showed that the median of the Fed policymakers eye three interest rates hikes in 2023, the NZD/USD recovers during the New York session, trading at 0.6782 at the time of writing.
Further, the Fed’s last Summary of Economic Projections (SEP) showed that the median of the Federal Reserve Board members view the Fed Fund Rates at 0.9% by the end of 2022, 1.6% in 2023, and 2.1% by the end 0f 2024.
US bond yields are rising in the bond market, with the US 10-year Treasury yield advancing two basis points, sitting at 1.46%, while the US Dollar Index rises some 0.11%, at 96.68.
On Wednesday, in their last monetary policy meeting of the year, the Fed decided the bond-taper based on “inflation developments and the further improvement in the labor market.” Moreover, it announced the adjustment of its bond purchasing program, kicking in by January, with purchases of $40 Billion in US Treasuries and $20 Billion in mortgage-backed securities (MBS).
Despite the adjustment to the bond taper, the Fed left the door open for further adjustments as needed to the QE’s reduction pace. Concerning the Omicron newly discovered strain, the Fed said that “risks to the economic outlook remain, including from new variants of the virus.”
The New Zealand dollar advances sharply against the buck, despite the hawkish rhetoric of the Fed. At press time, the pair pierced the December 14 high at 0.6770, and it is closing fast towards the December 13 swing high at 0.6800.
In the event of a clear break above the latter, it would expose key resistance levels. The first resistance would be the December 9 high at 0.6823, followed by the December 1 pivot high at 0.6867, and then the figure at 0.6900.
Risk Warning: Trading Forex and CFDs on margin carries a high level of risk and may not be suitable for all investors. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 72.72% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Prior to trading, you should take into consideration your level of experience and financial situation. TeleTrade strives to provide you with all the necessary information and protective measures, but, if the risks seem still unclear to you, please seek independent advice.
© 2011-2022 Teletrade-DJ International Consulting Ltd
Teletrade-DJ International Consulting Ltd is registered as a Cyprus Investment Firm (CIF) under registration number HE272810 and is licensed by the Cyprus Securities and Exchange Commission (CySEC) under license number 158/11.
The company operates in accordance with the Markets in Financial Instruments Directive (MiFID).
The content on this website is for information purposes only. All the services and information provided have been obtained from sources deemed to be reliable. Teletrade-DJ International Consulting Ltd ("TeleTrade") and/or any third-party information providers provide the services and information without warranty of any kind. By using this information and services you agree that under no circumstances shall TeleTrade have any liability to any person or entity for any loss or damage in whole or part caused by reliance on such information and services.
TeleTrade cooperates exclusively with regulated financial institutions for the safekeeping of clients' funds. Please see the entire list of banks and payment service providers entrusted with the handling of clients' funds.
Teletrade-DJ International Consulting Ltd currently provides its services on a cross-border basis, within EEA states (except Belgium) under the MiFID passporting regime, and in selected 3rd countries. TeleTrade does not provide its services to residents or nationals of the USA.