EBC Markets Briefing | Kiwi dollar remains weak after Fed's hawkish hold

The New Zealand dollar struggled Thursday after the Fed kept rates unchanged as anticipated, though signalling that future cuts depend on inflation data left the market outlook unclear.

The currency fell sharply after the RBNZ unexpectedly held key interest rate steady. Markets had almost fully priced in an interest rate hike on the ground of the still-hot inflation.

New Zealand's annual inflation rate hit 3.7% in Q3, down from 4.1% in the previous quarter and lower than expected. The reading stayed well above the target, as the country is a net importer of energy.

Bets on a December rate hike collapsed following the decision, with LSEG data showing the probability of a 25-bp lift diving to 40.8%. Policymakers aim to not choke off fragile recovery.

New Zealand business confidence increased slightly in October as companies maintained an optimistic outlook, with all forward-looking activity indicators turning positive, according to a survey from ANZ Bank.

Elsewhere while Fed officials view political neutrality as a core tenet of the institution, some market commentators suggest the central bank will avoid hiking interest rates so close to an election.

EBC Financial Group analyst says the Kiwi prominently features a completed bear flag pattern A break below $0.5605 would expose $ 0.5580.

Asset Recap

As of market close on 28 October, among EBC major products, Stellantis shares led gains. The firm expects to outpace its cost-cutting goals, securing its profit guidance and a projected return to positive cash flow in 2027.

Boston Scientific stock crashed after cutting its 2026 outlook in the wake of a cybersecurity incident in August. Sales are projected to slide 1% to 3% in Q4, with the next key drivers largely uncertain.

US stocks finished higher as AI momentum and a wave of Q3 earnings reports lifted the market, just as the Fed began its penultimate meeting of the year. Tech stocks received a brief market reprieve.

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EBC Financial Group Disclaimer: This material is for general information purposes only and is not intended as (and should not be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by EBC Global Financial Collaboration or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.