Market situation on May 27 – RBNZ joins the "hawk" club
The market seems to assume that within the next few hours a memorandum will be signed, after which the parties will sit down for grueling 60‑day negotiations. An open war is not in the interest of either Iran or the USA. What matters is how quickly the Strait of Hormuz will be opened – the latest speculation mentioned a 30‑day period necessary, among other things, for clearing mines.
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Meanwhile, although oil has cooled in recent days, the "hawkish tensions" in central banks are becoming more visible. Overnight the RBNZ meeting concluded with the decision to keep rates at 2.25 % by the vote of President Anna Breman. The statement, however, was clearly "hawkish" – rate hikes will be necessary, as indicated by the updated OCR path – a 3.0 % level is to be reached by Q1 2027, compared to the end‑2028 scenario forecasted in February. The expected inflation spike – up to 4.3 % this year – drives this. As a result, the NZD is today the strongest currency in the rankings, and a fairly interesting cross today is AUDNZD.
The decline is also influenced by the weakness of the AUD after CPI inflation slowed in April to 4.2 % year‑over‑year (4.4 % was expected). Remaining in Asian markets, it is worth noting the comment from the Bank of Japan’s governor – Ueda exceeded expectations regarding a June rate hike, warning of the "persistent" nature of inflation. However, this did not significantly affect USDJPY levels.
The macro calendar is dull today. In the morning we learned the French consumer confidence reading, which fell below forecasts in May, dropping to 82 points. Nevertheless, euro investors are focusing more on expectations regarding an ECB rate hike at the June 11 meeting. Yesterday, in a "hawkish" tone, Philip Lane and Isabel Schnabel spoke. As a result, expectations for such a move jumped to 89 %. This keeps EURUSD above 1.16.
NZDUSD – increased chances of breakout from consolidation
The dollar on the broad market is mixed today, as markets still await a U.S.–Iran peace memorandum, but remain in "discord" regarding inflation expectations – the FED’s December rate hike is still in play. Nevertheless, the situation around the RBNZ is clear; although a rate hike did not occur today, up to three 25‑basis‑point moves are still possible this year.
This means that NZD moves into the "aggressive" currency group that will benefit from central bank actions. Previously we had a similar situation with AUD and NOK – the RBA and Norges Bank context. Now AUD is a "dying star", and NOK also "shines weakly".
Daily NZDUSD chart
Technically we are close to a breakout above the visible two‑week consolidation on NZDUSD. The prospects for a return to around 0.60, tested at the beginning of May, are growing.
