US Dollar Bubble Bursts as NZ Economy Defies Expectations
The recent surge in US interest rates and the value of the US dollar may be short-lived. Roger J Kerr, an expert on financial markets, believes that the market's pricing for a Fed hike to combat inflation is overly optimistic. He expects a weaker-than-expected US jobs growth report and a subsequent decline in the USD.
New Zealand's economy, on the other hand, is showing signs of resilience. Despite the energy crisis, GDP growth is expected to bounce back to around 1% for the September quarter. The RBNZ's GDP Nowcast Predictor Model suggests that the economy will continue to expand at a 3% annual clip if global disruptions subside.
The NZD/USD exchange rate has been more resilient than expected, reaching a high of 0.5870 in July and only pulling back slightly to 0.5790. The market is already at extreme 'short-sold' NZD positions, but the RBNZ's hawkish monetary stance may deter further selling.