FX.co ★ ANZ Bank expects growth in rates in New Zealand in November. Overview of USD, NZD, AUD

Today, the reporting season starts in the United States. JPMorgan and Goldman Sachs will be the first to report, which is likely to set the tone of the overall risk assessment in the coming days. It is predicted that the reports will be positive, with the S&P 500 and NASDAQ indexes recording new highs.

In yesterday's interview with Bloomberg, ECB President Christine Lagarde suggested that investors should prepare for a new monetary stimulus guide in 10 days and said that new measures could be taken next year to support the EU economy after the end of the current bond repurchase program. Lagarde said that the ECB meeting on July 22 will provide some interesting variations and changes. She expects that the current plan of the ECB to buy bonds for 1.85 trillion euros will be valid at least until March 2022, but it may be followed by a "transition to a new format". This plan is still unclear, but the hint was accepted by traders. The probability of strengthening the euro has fallen.

Today, the dominant idea may be the resumption of the growth of oil and gold, while the US dollar will be under pressure.

NZD/USD

ANZ Bank assumes that the RBNZ is ready to start reducing incentives in the very near future. The first growth to 0.5% may take place as early as November, after which it will continue at each new meeting until it reaches the level of 1.75% in early 2023.

Such a bold and hawkish assumption is justified by strong economic growth, which may result in overheating. The labor market is already where the RBNZ needs it, that is, at a level close to the maximum employment level. ANZ expects inflation at 3% in the 3rd quarter, which means that inflationary pressures will increase.

Thus, it is predicted that the RBNZ will start withdrawing from the stimulus and raise the rate much earlier than the Fed. This is a very bullish forecast since it assumes an increase in real profitability for the NZD, but the surprising thing is that financial markets have not yet reacted to it in any way. The yield differential between 10-year US Treasures and similar New Zealand bonds is almost stable. There is also no demand for the currency, which may indicate that investors do not really believe such forecasts yet. The US has high inflation, but the Fed considers it temporary. Now, what prevents the RBNZ from saying the same thing and eliminating hawkish forecasts?

The CFTC report showed minimal weekly changes. The estimated price is below the long-term average and does not make any attempts to rise. Most likely, the time for the growth of the New Zealand dollar has not yet come.

The New Zealand dollar is in the consolidation zone. It can be assumed that a downward exit is more likely. We expect to break through the support level of 0.6915 and then move to 0.6795.

AUD/USD

Australia's business environment index declined 12p in June to + 24p, driven by a drop in trade, earnings, and employment sub-indices. Despite the fact that the index still remains at a fairly high level, there is a threat that further growth in the coronavirus cases will lead to an even greater decline in indicators.

During the reporting week, AUD's net short position increased. The correction amounted to 527 million, and the short position itself increased to -1.865 billion. There are several concerns in a number of areas, which are the general drop in demand for risk, lack of strong demand from China, as well as a noticeable increase in COVID-19 cases, despite the good rates of vaccination.

The estimated price is confidently directed down and there are no signs of a reversal yet.

The AUD/USD pair is in a descending channel and a decline to the level of 0.7415 (23.6% of annual growth) has taken place. A possible upward correction is limited by the zone of 0.7530/60. Upon entering, one should look for an opportunity to sell. The nearest target is set at 0.7320/40.