Forex News
Commerzbank’s Volkmar Baur notes New Zealand inflation at 3.1% year-on-year, slightly above the Reserve Bank of New Zealand (RBNZ) target, and warns that higher energy prices could push it further. He sees a possible rate hike in late May, which might briefly support the New Zealand Dollar (NZD). However, stagflation risks and growth headwinds leave the medium-term outlook for the kiwi unfavourable.
RBNZ caution versus weak growth outlook
"With a year-over-year increase of 3.1%, inflation in New Zealand in the first quarter of this year was slightly above the central bank’s target range. However, given the rise in energy prices, this may not be the end of it."
"The central bank has therefore already emphasized in recent weeks that it will be very cautious regarding monetary policy. Waiting for clear signs that second-round effects will materialize would be too late - at least according to Governor Anna Breman."
"A potential hike in the key interest rate at the upcoming meeting in late May does seem possible. However, this naturally depends heavily on how the situation in the Gulf continues to develop."
"In any case, a hike would provide some short-term support for the kiwi. In the medium term, however, this is unlikely to have a positive effect."
"All in all, this is not a favorable environment for the kiwi."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
Societe Generale’s Kenneth Broux frames Kevin Warsh’s confirmation hearing as pivotal for US rates, with markets focused on potential changes to the Fed’s reaction function and implications for the long end of Treasury yields. He notes concerns that past policy choices have increased vulnerability to shocks and may be pushing investors to demand higher term premia.
Fed transition watched for curve signals
"Central Banks at a Crossroads” is the title of the speech delivered by Kevin Warsh almost one year ago to this day in the margins of the IMF Spring meetings (G30, April 25, 2025). “Reforming, if not restoring, key economic institutions” dives straight into the debate about the role of government agencies incl the central bank, how to be accountable and responsible for policy actions."
"The bond market will try to glean valuable insights during today’s confirmation hearing. How does the Warsh Fed evolve from the Powell Fed, are there reasons to position for tweaks in the yield curve in either bear flattening or steepening fashion. The administration is hell bent on lowering interest rates before the midterms but that’s a long shot."
"Warsh will from June (most likely) navigate a tricky landscape and a bulging in-tray at a time when inflation could be re-accelerating (energy prices, World Cup) and reckless stewardship of government finances is motivating investors to bid up the term premium or compensation to hold Treasury debt."
"Money markets rate the probability of one cut this year at 50%. Some of the personal views that emerged from his speech last year is that preferred measure of inflation is beneath the high standing of the central bank. Data dependence could be discontinued and near-term forecasting is another distraction."
"The bottom line is that policy choices of the past have made the US economy more vulnerable to shocks and less able to adjust organically. With every new crisis, the bazooka must get bigger. Under pressure from Trump, Markets assume that the Fed could be more inclined to navigate a path of lower rates. This was Warsh last year: “I strongly believe in the operational independence of monetary policy as a wise political economy decision. And I believe that Fed independence is chiefly up to the Fed”."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
- Dow Jones futures rise on improved sentiment as Iran plans second-round US talks before the ceasefire deadline.
- Wall Street closed softer on Monday as renewed US-Iran tensions escalated over the weekend.
- Trump said he is unlikely to extend the truce with Tehran if no deal is reached.
Dow Jones futures gain 0.14% above 49,700, with S&P 500 and Nasdaq 100 futures also advancing 0.13% and 0.27% to near 7,160 and 26,820, respectively, during the European hours on Tuesday ahead of the United States (US) regular opening.
US stock futures advance as sentiment improves, supported by reports that Iran will send a delegation to Islamabad for a second round of talks with the US before the truce expires. US President Donald Trump said Vice President JD Vance will travel to Pakistan to resume negotiations, “either Tuesday night or Wednesday morning,” per Bloomberg.
In regular US trading on Monday, Wall Street closed on a softer note. The Dow Jones edged down 0.01%, while the S&P 500 and Nasdaq 100 fell 0.24% and 0.26%, respectively, pulling back from record highs as US-Iran tensions escalated again over the weekend. Major technology stocks led the losses, with Broadcom and Meta dropping more than 2%, while Microsoft, Nvidia, and Alphabet declined over 1%.
President Trump stated he is unlikely to extend the truce with Tehran if no agreement is reached before it expires this week, adding that the Strait of Hormuz will remain blocked until a deal is finalized. These developments lifted oil prices and inflation risks, which fade the likelihood of Federal Reserve (Fed) rate cut bets.
Dow Jones FAQs
The Dow Jones Industrial Average, one of the oldest stock market indices in the world, is compiled of the 30 most traded stocks in the US. The index is price-weighted rather than weighted by capitalization. It is calculated by summing the prices of the constituent stocks and dividing them by a factor, currently 0.152. The index was founded by Charles Dow, who also founded the Wall Street Journal. In later years it has been criticized for not being broadly representative enough because it only tracks 30 conglomerates, unlike broader indices such as the S&P 500.
Many different factors drive the Dow Jones Industrial Average (DJIA). The aggregate performance of the component companies revealed in quarterly company earnings reports is the main one. US and global macroeconomic data also contributes as it impacts on investor sentiment. The level of interest rates, set by the Federal Reserve (Fed), also influences the DJIA as it affects the cost of credit, on which many corporations are heavily reliant. Therefore, inflation can be a major driver as well as other metrics which impact the Fed decisions.
Dow Theory is a method for identifying the primary trend of the stock market developed by Charles Dow. A key step is to compare the direction of the Dow Jones Industrial Average (DJIA) and the Dow Jones Transportation Average (DJTA) and only follow trends where both are moving in the same direction. Volume is a confirmatory criteria. The theory uses elements of peak and trough analysis. Dow’s theory posits three trend phases: accumulation, when smart money starts buying or selling; public participation, when the wider public joins in; and distribution, when the smart money exits.
There are a number of ways to trade the DJIA. One is to use ETFs which allow investors to trade the DJIA as a single security, rather than having to buy shares in all 30 constituent companies. A leading example is the SPDR Dow Jones Industrial Average ETF (DIA). DJIA futures contracts enable traders to speculate on the future value of the index and Options provide the right, but not the obligation, to buy or sell the index at a predetermined price in the future. Mutual funds enable investors to buy a share of a diversified portfolio of DJIA stocks thus providing exposure to the overall index.
European Central Bank (ECB) Vice President Luis de Guindos said during the European trading session on Tuesday that the central bank sees private credit as one of the sources of risk to financial stability alongside high market valuations and loose fiscal policy in some countries, Reuters reports.
Market reaction
There seems to be no impact of ECB Guindos' comments on the Euro (EUR), as they seem to lack any cues regarding the monetary policy outlook. As of writing, EUR/USD trades 0.2% lower to near 1.1760 as US Dollar (USD) trades firmly.
ECB FAQs
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy for the region. The ECB primary mandate is to maintain price stability, which means keeping inflation at around 2%. Its primary tool for achieving this is by raising or lowering interest rates. Relatively high interest rates will usually result in a stronger Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.
In extreme situations, the European Central Bank can enact a policy tool called Quantitative Easing. QE is the process by which the ECB prints Euros and uses them to buy assets – usually government or corporate bonds – from banks and other financial institutions. QE usually results in a weaker Euro. QE is a last resort when simply lowering interest rates is unlikely to achieve the objective of price stability. The ECB used it during the Great Financial Crisis in 2009-11, in 2015 when inflation remained stubbornly low, as well as during the covid pandemic.
Quantitative tightening (QT) is the reverse of QE. It is undertaken after QE when an economic recovery is underway and inflation starts rising. Whilst in QE the European Central Bank (ECB) purchases government and corporate bonds from financial institutions to provide them with liquidity, in QT the ECB stops buying more bonds, and stops reinvesting the principal maturing on the bonds it already holds. It is usually positive (or bullish) for the Euro.
ING’s commodities team highlights that China’s Silver imports hit a record in March, driven by retail and solar-sector demand, far exceeding the 10‑year March average. Strong domestic demand earlier pushed Chinese Silver prices to a premium and spurred arbitrage flows, but prices have since retreated from January’s record highs as retail momentum softened.
Chinese imports retreat from extremes
"In other precious metals, China’s silver imports surged to a record high in March, boosted by demand from retail investors and the solar sector."
"Imports rose to around 836 tonnes, according to Chinese customs data, well above the 10‑year March average of roughly 306 tonnes."
"Earlier in the year, strong domestic demand pushed Chinese silver prices to a premium over international markets, triggering arbitrage flows."
"Silver prices have since then pulled back from their January record highs, while retail momentum has softened."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
- USD/CHF rises to near 0.7800 as the US Dollar gains ahead of Warsh’s confirmation hearing.
- No official confirmation from Iran yet that it is sending a team to resume peace talks with Iran.
- The US Retail Sales data is estimated to have grown strongly by 1.4% MoM in March.
The USD/CHF pair trades 0.25% higher at around 0.7800 during the European trading session on Tuesday. The Swiss Franc pair gains as the US Dollar (USD) rises ahead of the confirmation hearing of United States (US) President Donald Trump’s nominee, Kevin Warsh, as the Federal Reserve’s (Fed) next chairman at 14:00 GMT.
As of writing, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades 0.25% higher to near 98.30.
Investors await Kevin Warsh’s testimony to get cues regarding the Fed’s monetary policy outlook.
Before Warsh’s testimony, investors will also focus on the US Retail Sales data for March, which will be published at 12:30 GMT. The Retail Sales data, a key measure of consumer spending, is estimated to have grown at a faster pace of 1.4% Month-on-Month (MoM) against 0.6% increase seen in February.
On the geopolitical front, a report from the Wall Street Journal (WSJ) shows that Iran has agreed to have another round of peace talks with the US; however, there has been no official confirmation.
USD/CHF technical analysis
USD/CHF trades higher at around 0.7800 at the press time. However, the near-term tone remains bearish as it holds beneath the 20-day exponential moving average (EMA) at 0.7866 and below the mid-range 50.0% Fibonacci retracement at 0.7826.
The Relative Strength Index (14) hovers near 41, reflecting weak momentum that reinforces the downside bias while stopping short of oversold conditions.
On the downside, immediate support is aligned at the 61.8% Fibonacci retracement at 0.7775, with deeper demand seen at the 78.6% level at 0.7701 and then the recent Fibonacci cycle low around 0.7608. On the topside, a recovery would first need to clear the 50.0% retracement at 0.7826, before challenging the 20-day EMA at 0.7866 and the 38.2% retracement at 0.7878; above there, the 23.6% level at 0.7941 and the cycle high near 0.8044 act as successive resistance hurdles.
(The technical analysis of this story was written with the help of an AI tool.)
US Dollar FAQs
The US Dollar (USD) is the official currency of the United States of America, and the ‘de facto’ currency of a significant number of other countries where it is found in circulation alongside local notes. It is the most heavily traded currency in the world, accounting for over 88% of all global foreign exchange turnover, or an average of $6.6 trillion in transactions per day, according to data from 2022. Following the second world war, the USD took over from the British Pound as the world’s reserve currency. For most of its history, the US Dollar was backed by Gold, until the Bretton Woods Agreement in 1971 when the Gold Standard went away.
The most important single factor impacting on the value of the US Dollar is monetary policy, which is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability (control inflation) and foster full employment. Its primary tool to achieve these two goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, the Fed will raise rates, which helps the USD value. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates, which weighs on the Greenback.
In extreme situations, the Federal Reserve can also print more Dollars and enact quantitative easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used when credit has dried up because banks will not lend to each other (out of the fear of counterparty default). It is a last resort when simply lowering interest rates is unlikely to achieve the necessary result. It was the Fed’s weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy US government bonds predominantly from financial institutions. QE usually leads to a weaker US Dollar.
Quantitative tightening (QT) is the reverse process whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing in new purchases. It is usually positive for the US Dollar.
OCBC strategists Sim Moh Siong and Christopher Wong argue that Swiss Franc (CHF) safe-haven demand is being constrained by perceived Swiss National Bank (SNB) intervention risk. They see the recent EUR/CHF move below 0.92 as partly reflecting reduced intervention expectations as geopolitical risks ease. However, they believe it is too early to assume the SNB will accept sustained CHF strength to fight imported inflation.
SNB stance tempers Franc strength
"CHF’s traditional safe-haven bid has been blunted by the SNB’s shift toward more active intervention stance against currency strength since the outbreak of the US–Iran conflict."
"The SNB likely stepped in to offset safe-haven inflows, acting reactively to cap CHF gains rather than proactively weaken the currency."
"The overnight grind of EUR/CHF below 0.92 may reflect market pricing of reduced SNB intervention as acute geopolitical risks fade."
"However, we think it is premature to expect the SNB to tolerate sustained CHF strength as a tool to counter imported inflation."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
- NZD/USD extends gains for the second day in a row and nears multi-week highs at 0.5930.
- Stronger-than-expected inflation in New Zealand boosts hopes of near-term RBNZ interest rate hikes.
- Above 0.5930, the next upside target would be the March 10 high at 0.5965.
The New Zealand Dollar (NZD) appreciates for the second consecutive day against the US Dollar (USD) on Tuesday, fuelled by stronger-than-expected New Zealand inflation figures and a moderate optimism about a resolution of the Middle East conflict. The pair extends its rebound from Monday's 0.5850 lows and trades above the 0.5900, with bulls now aiming for last week's highs in the 0.5930 area.
Data released during Tuesday’s Asian session revealed that New Zealand's inflation pressures, as measured by the Consumer Price Index (CPI), remained steady at a 3.1% year-on-year rate in the first quarter of the year, against market expectations of a decline to 2.9%. Quarter-on-quarter, consumer inflation accelerated 0.9% from 0.6% in the last three months of 2025.
These figures confirm that price pressures remain above the Reserve Bank of New Zealand’s (RBNZ) 1% to 3% targed band, with the risks skewed to the upside, amid the impact of the US-Iran war, feeding hopes of RBNZ rate hikes in the near term.
Technical Analysis
NZD/USD trades at 0.5914 at the time of writing, with technical indicators in the 4-hour chart highlighting a mildly bullish near-term bias. The Relative Strength Index (RSI) around 62 suggests positive but not overextended momentum. The Moving Average Convergence Divergence (MACD) has turned slightly positive, hinting that upside pressure is gradually building.
Initial resistance emerges at Friday's high of 0.5930, followed by the March 10 high at 0.5965, ahead of the 0.6000 psychological level and the late February highs near 0.6015.
On the flip side, Monday's lows at the 0.5850 area are likely to test bearish reversals. A confirmation below that level would increase negative pressure towards the 0.5800 area, which held bears in mid-April.
(The technical analysis of this story was written with the help of an AI tool.)
New Zealand Dollar Price This week
The table below shows the percentage change of New Zealand Dollar (NZD) against listed major currencies this week. New Zealand Dollar was the strongest against the Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.29% | -0.23% | 0.05% | -0.28% | -0.51% | -0.83% | -0.30% | |
| EUR | 0.29% | 0.06% | 0.34% | 0.04% | -0.18% | -0.57% | 0.02% | |
| GBP | 0.23% | -0.06% | 0.28% | -0.02% | -0.24% | -0.63% | -0.06% | |
| JPY | -0.05% | -0.34% | -0.28% | -0.33% | -0.51% | -0.91% | -0.33% | |
| CAD | 0.28% | -0.04% | 0.02% | 0.33% | -0.13% | -0.57% | -0.03% | |
| AUD | 0.51% | 0.18% | 0.24% | 0.51% | 0.13% | -0.32% | 0.19% | |
| NZD | 0.83% | 0.57% | 0.63% | 0.91% | 0.57% | 0.32% | 0.53% | |
| CHF | 0.30% | -0.02% | 0.06% | 0.33% | 0.03% | -0.19% | -0.53% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the New Zealand Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent NZD (base)/USD (quote).
MUFG’s Senior Currency Analyst Lee Hardman notes the US Dollar (USD) has retreated, with the US Dollar Index (DXY) back towards 98.000, as markets anticipate further de-escalation in the Middle East conflict. He highlights that optimism over a potential deal and normalization of traffic through the Strait of Hormuz is capping Dollar upside, even though a confirmed peace agreement may not trigger another sharp USD sell-off.
De-escalation hopes cap Dollar upside
"The US dollar has quickly given up gains recorded at the start of this week with the dollar index falling back towards the 98.000-level."
"Despite the setbacks over the weekend including Iran firing on vessels in the Strait of Hormuz and the US taking over an Iranian ship, market participants remain optimistic that the Middle East conflict will continue to deescalate providing a headwind for US dollar performance."
"Despite the divide, Bloomberg has reported that there’s still a good chance of a deal in the next few days that effectively ends the war, even if more negotiations are needed over nuclear and military issues according to officials."
"With the US dollar already trading back close to levels prior to the Middle East conflict from late February, the announcement of a deal may not trigger another sharp sell-off for the US dollar."
"Market participants will also be watching closely to see how quickly traffic then normalizes through the Strait to ease global energy supply restrictions."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
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