FX Majors Weekly Outlook (21-25 November) | Forexlive

UPCOMING
EVENTS:

Wednesday:
RBNZ Policy Announcement, S&P Global PMI for US, FOMC Minutes.

Last week
was a pretty choppy one in terms of price action and we will probably see
another similar one as we wait for the big economic data like ISM PMIs, NFP and
US CPI releasing in the following weeks. The current theme is that the Fed is
looking to slow the pace of hikes beginning with 50 bps at the December meeting
unless we get a surprisingly hot CPI report just before the meeting.

The Fed and
the market are now focused more on the terminal rate rather than the pace of
rate hikes. This terminal rate is seen as somewhere in the 5% area. This week
we have also US Thanksgiving holiday beginning on Thursday, so we will have a
shorter trading week with just Wednesday providing some notable events.

On Wednesday
the RBNZ is expected to raise its cash rate by 75 bps as inflation in New
Zealand remains high at 7.2% Y/Y for Q3 data, which is well above their 1-3%
target. The RBNZ seems the most sensible central bank that is not afraid to
keep raising rates aggressively to achieve its goal, while other major central
banks are slowing their hikes with inflation still well above their targets.

In the chart
below the NZD/USD may pull back to the 0.60ish level before continuing the
upward trend as the data for US is now expected to reinforce market expectation
of an early pause sometime in Q1 2023. The next USD appreciation phase should
come amid fear in the market when it will be more about the recession than the
slowing inflation rate and pace of hikes.