Currency Market Analysis

Oct 06, 2021 | Currency Market Analysis

Global Themes

All eyes on RBNZ with decision due

The USD inched higher overnight with markets on tenterhooks ahead of today’s Reserve Bank of New Zealand meeting.

The latest market pricing sees a 97% chance of a 25-basis point hike to 0.5% (source: Refinitiv).

Just as importantly, the market is looking for guidance ahead of the RBNZ’s November meeting, with the market ascribing an 80% chance of another 25-basis point hike.

Greenback remains strong

The greenback continuing to gain overnight on expectations of tighter policy from the US Federal Reserve.

A stronger services PMI number from the US helped the USD higher.

The PMI numbers also helped equity sentiment and saw US shares rebound, with the Dow Jones up 0.9%.

US jobs in focus

Apart from the RBNZ, the main focus for FX is on US jobs data ahead of Friday’s non-farm employment.

Tonight, the ADP private sector report, due at 8.15pm, will provide an early guide to the US labour market, a key driver of next month’s Fed policy decision.

A stronger number might boost the USD.

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