The foreign exchange market for the month of August 2024 ended at the settlement of prices on Friday, August 30, as the New Zealand currency provided an amazing performance throughout the month, as it managed to outperform most major and minor currencies.
Buying the New Zealand dollar is broadly active as the best investment available, based on the weak prospect of additional New Zealand interest rate cuts this year.
With the country’s economic dollar improving and domestic business confidence rising to a ten-year high, the RBNZ is widely likely to adopt a more aggressive approach to the pace of New Zealand’s interest rate cuts.
The gains in the New Zealand currency were also supported by improved risk sentiment in global financial markets, as the monetary easing cycle in the United States, the world’s largest economy, approaches.
Read also:HSBC: Factors boosting the strength of the US dollar
Returning to the list of winning currencies in August, the US dollar may have moved at the bottom of that list due to the acceleration of the open sell-off, after more dovish comments by Federal Reserve Chairman Jerome Powell at the Jackson Hole forum, which strongly boosted the prospects of a significant pace of US interest rate cuts starting in September.
Before completing the reasons that supported the New Zealand dollar and put severe pressure on the US dollar, we first learn about the performance of the eight major currencies in the foreign exchange market over the course of July 2024. The New Zealand dollar achieved a rise of 10 points on the monthly ‘FX News Today’ index to measure the strength of currencies, then the Australian dollar in the second place with a level of 4 points, then the Swiss franc in the third place with a level of 3 points, and the US dollar occupied the last place with a level of negative 12 points.
Looking at the details of the performance of the New Zealand dollar in August against the seven major currencies, we find that the US dollar swept by 5.4%, with the largest monthly gain in 2024, specifically since November 2023, and Thursday, August 29, recorded a seven-month high of 62.99 cents.
It gained 2.95% against the euro, the biggest monthly gain since September 2023, and on Thursday, August 29, recorded a seven-week high of $1.7651.
It rose 2.9% against the pound sterling, and achieved the largest monthly gain since August 2023, and Thursday, August 29, recorded a seven-week high of $ 2.0981.
It rose 2.65% against the Canadian dollar, and achieved the largest monthly gain since last May, and on Thursday, August 29, recorded a two-month high of $ 0.8474.
It rose 2.35% against the Japanese yen, and Friday, August 30, recorded a four-week high of 91.42 yen, added 1.65% against the Swiss franc, the largest monthly gain since May, and Friday, August 30, recorded a four-week high of 0.5321 francs.
It rose 2.35% against the Japanese yen, and Friday, August 30, recorded a four-week high of 91.42 yen, added 1.65% against the Swiss franc, the largest monthly gain since May, and Friday, August 30, recorded a four-week high of 0.5321 francs.
It rose 1.6% against the Australian dollar, and achieved the largest monthly gain since November 2022, and recorded on Thursday, August 29, and Thursday recorded a two-month high of $ 1.0798.The Reserve Bank of New Zealand (NYSE:JPM) said that the Reserve Bank of New Zealand’s decision to move early on cutting interest rates provided some support for the New Zealand currency, and with the prospects of better economic results now emerging in New Zealand, easing pressure on high interest rates.
JPMorgan analyst Ben K. Garman said: “Markets were expecting a lot of easing already, but after the process began, and shortly before that expected, there is now a little more comfort that the New Zealand economy will stabilize until 2025, allowing for a reduction in the risk premium for a somewhat more turbulent slowdown.
Garman added that prices are not as headwinds as one might assume, as the RBNZ has only roughly matched the degree of easing implicit in the final interest rate pool.
In other words, the market may have reached its maximum pessimism on the New Zealand dollar as any improvement in the economic cycle eases the scope of interest rate cuts required by the RBNZE.
Best available investmentInvestors focus on buying the New Zealand dollar as one of the best investment opportunities available in the foreign exchange market, as the Reserve Bank of New Zealand sticks to a high interest rate that is second behind the Federal Reserve’s interest rates in the list of interest rates for the eight major currencies.
With the Federal Reserve close to cutting US interest rates in September, New Zealand’s interest rates are expected to top the list of interest rates for major major and minor currencies.
Business confidence in New Zealand jumped in August to a ten-year high as indicators of forward-looking activity rose strongly, a survey by ANZ Bank showed.
A key measure of New Zealand’s Business Confidence Survey showed that 50.6% of respondents expect the New Zealand economy to improve over the next year, versus an optimistic 27.1% in the previous survey in July.
Sharon Zollner, chief economist at ANZ Bank, said in a statement: “Things are trending to improve, albeit from a very dark place for many companies.
The chances of the Reserve Bank of New Zealand cutting interest rates by about 25 basis points at the October 9 meeting are still less than 50%, waiting for more data on inflation, unemployment and growth in New Zealand in the coming period.
Most global stock markets rose, led by US stocks on Wall Street, amid strong risk sentiment, especially with the increasing prospects that the Federal Reserve is about to ease monetary policy and cut interest rates in the United States.The picture above shows the negative performance of the US dollar in August 2024 against the seven major currencies in the foreign exchange market, due to more pessimistic comments from the Federal Reserve Chairman.
Fed President Jerome Powell said at the Jackson Hole Economic Forum: “It’s time to adjust monetary policy. Powell added: “My confidence has increased that inflation is on a sustainable path to return to the target of 2%.
Powell stressed that we do not seek and do not welcome a further slowdown in labor market conditions, and Powell explained: The current interest rate level gives ample scope to respond to risks, including more unwanted weakness in the labor market.
Jerome Powell said: “The slowdown in the labor market is unequivocal, we are no longer overactive.Powell added: “Inflation has dropped significantly, and we are now much closer to the target.
Powell explained: “The balance of risks that threatens our states has changed. Bullish risks to inflation have diminished, and downside risks to employment have increased.
What stock should you buy in your next trade?
The computing forces of artificial intelligence are changing the stock market. ProPicks from Investing.com are 6 winning stock portfolios chosen by our advanced AI. In 2024 alone, ProPicks’ AI identified two stocks that jumped more than 150%, 4 more that jumped more than 30%, and another 3 stocks that jumped more than 25%. What is the arrow with the next jump?
