Forex Analysis & Reviews: 15.03.2022 - Review of USD, NZD and AUD:...

15.03.2022 02:12 PM

Review of USD, NZD and AUD: Fed begins its two-day meeting. Demand for commodities dipped sharply.

The Fed began its two-day meeting today, and markets are again seeing 7 rate hikes this year. If that happens, interest rates will increase to 1.75-2.00%, which will help reduce inflationary pressures.

At the moment, commodity markets are seeing an aggressive decline in quotes, primarily due to the situation in Ukraine. Brent fell to $100, while iron ore lost 7.7%. Copper also dipped by 2.5%, while aluminum decreased by 5.1%. The sharp drop in risk appetite also put pressure on commodities, but there is no need to draw a final conclusion yet, especially before the announcement of the results of the FOMC meeting.

NZD/USD

Three weeks have passed since the February meeting of the RBNZ. Back then, the central bank raised its rate by 0.25% and started quantitative tightening. The situation has become more hawkish now, and the growth of inflationary expectations has become stronger. If commodity prices continue to rise, the RBNZ may raise the rate by 0.5% in April and May. And if oil prices continue to increase, everything will turn up as well, since inflation is growing very quickly. To see a decline, the central bank has to act more aggressively than the Fed.

But that will widen the yield, in favor of New Zealand bonds. On the bright side, it will be a strong bullish factor for NZD/USD, which, at the moment, is bearishly overweight, but still showing signs of a reversal.

Latest report indicates that NZD's net short position fell 115m to -843m. The estimated price is turning up, which means demand is growing.

Presumably, NZD will find support at 0.6690/6710, with the nearest targets at 0.6890/6920 and 0.7030/50.

AUD/USD

Macroeconomic statistics in Australia are very positive. According to latest reports, consumption in Q4 rebounded strongly, consumer spending in Q1 remains strong and strong labor force points to a further decline in unemployment. The National Australia Bank even forecast that the unemployment rate will fall below 4% in March and to 3.5% by the middle of the year. That is likely to lead to higher wages, and thus to higher inflationary pressures.

Rising inflation, in turn, reinforces hawkish sentiment in the RBA. Now, the forecasts for the rate are: +0.15% in August, then +0.25% in September and November. This is about 1% less than the Fed's planned rate, which, at first glance, is an argument in favor of the US dollar. But the important thing here is that the inflation gap persists, which means that the real yield of Australian bonds will be higher during the year. For AUD/USD to grow, geopolitical tensions must decrease and commodity prices must bounce up. If both of these happen, the pair will jump to 0.80. If only one occurs, the growth will not be rapid, but will be stable.

For now, the CFTC report says the net short position remains at -5.6 billion, but the settlement price rushed up, reflecting the outstripping growth of Australian securities yields and capital inflow into the stock market.

Most likely, the quote will go up after a small correction. Support can be found at 0.7180/7200), with target at 0.7460/80.

You have already liked this post today

*Disclaimer: The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.

If you have any content questions, please contact editorial-board@instaforex.com

# USD # NZD # NZDUSD # AUDUSD # AUD # COT (Commitments of Traders) Fundamental analysis

Recommended Stories

The Dollar Has Been Replaced. Nature Abhors a Vacuum

Bitcoin Took Its Chance

XAU/USD. Analysis and Forecast

EUR/GBP. Analysis and Forecast

Why the U.S. Dollar Keeps Falling

Loss of Confidence in the Fed Will Pressure the Dollar (Bitcoin Likely to Continue Rising, USD/CAD to Decline)

Market: Still Waters Run Deep

What to Pay Attention to on April 22? A Breakdown of Fundamental Events for Beginners

GBP/USD Overview – April 22: Dollar Decline Neutralizes Any Positive Economic Changes

EUR/USD Overview – April 22: The Emperor Has No Clothes...

Top analytics