NZ, Australian Dollars Up, Debt Market Savors an RBA Rally
Australian and New Zealand dollars rose on Tuesday. Global risk sentiment has declined slightly. The bond market broke when the Bank of Australia cut the risk of a super rate hike. Australia approved 0.3% to AUD 0.6970=D3; Gained support around $0.6930 per night; however, It still faces strong resistance at $0.6996 and $0.7069. The kiwi dollar was in the shadow above NZD 0.6338 Since the support was $0.6300. However, last week $0.6396 needed to be cleared to improve the technical background.
Debt futures grew; When the Governor of the Reserve Bank of Australia said he expected the Board to consider raising the policy interest rate to 50 basis points next month. This saw the July futures 0 #YIB: Rally 6 rise to 98.77. The market has estimated a 75 basis point move chance from the current 0.85%. Market prices at rates that would reach 4% by the end of the year were the most aggressive tightening, a record, a result which, in his view, is unlikely.
Australian Dollar and Economists
December futures jumped apt 20 points; However, at 96,430, they still represent an effective cash rate of around 3.57%. The RBA should move away from the previous emergency interest rate settings shortly. Estimated for a cash rate of 2.1% at the end of 2022, And 2.6% by the end of 2023. It is still below the market price. The risk is somewhat upward by the end of this year; however, it is still low on the market price if the RBA feels the need to make a mistake on the side of the restricted area.
There was more evidence in New Zealand that past rate hikes have worked very well, and consumer confidence fell to an all-time low in the June quarter. According to economists, much work is still to be done to alleviate inflationary pressures. However, if there is a more drastic slowdown in spending than the RBNZ expects, then it is likely that the increase in the cash rate will be more measured.
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