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New Zealand Dollar rises to near 0.5650 as Fed's Warsh gives no hint on October decision

9:09 PM ETConfirmed

Business Desk

In Short: Federal Reserve Chair Kevin Warsh on Friday refrained from giving any preview of the central bank's October 27-28 meeting decision on interest rates, leading the New Zealand Dollar (NZD) to rise to near 0.5650.

Warsh's speech in Bangkok on Friday scored a modest 5.6/10 on the FXS Speechtracker, slightly below the established baseline of 6.1/10, indicating a less impactful tone despite steady policy messaging.

The US Producer Price Index (PPI) rose by 6.3% year-on-year in September, compared to a rise of 5.6% in August, according to the Bureau of Labor Statistics. This increase was higher than the expected 5.3% rise.

Traders now price in a 27.7% probability of a rate hike at the October meeting, down from a previous 41.5% probability, as per the CME FedWatch Tool.

The NZD/USD pair rose to around 0.5650 during Asian trading hours on Friday, with initial resistance at the upper Bollinger Band around 0.5710 and a more significant barrier at the 100-period MA at 0.5780.

UBS analyst Simon Penn had previously written that an October hike on the eve of a midterm election, absent for 35 years, was politically untenable, and expected a December hike.

The US Dollar (USD) faced selling pressure against the NZD following Warsh's remarks, with the USD/JPY holding firm near the 155.00 mark and the US Dollar Index (DXY) gaining to 99.60.

GBP/USD stayed near 1.3480, unable to make headway ahead of the UK inflation report and the Fed decision.

The 10-year US Treasury yield touched 5.04% for the first time since 2007, driven by surging energy costs and inflation worries.

US stocks declined on Friday as tech and AI-related shares extended losses amid concerns over Chinese semiconductor competition and debt-funded AI infrastructure expansion.

The New Zealand Dollar's rise to near 0.5650 was influenced by the lack of clarity from Fed Chair Kevin Warsh on the October meeting's interest-rate decision.

The table showing the percentage change of the US Dollar against listed major currencies today provides context for the currency movements.

The technical analysis of the NZD/USD pair was written with the help of an AI tool.

Background

What's confirmed

• Warsh's speech in Bangkok on Friday scored a modest 5.6/10 on the FXS Speechtracker, slightly below the established baseline of 6.1/10, indicating a less impactful tone despite steady policy messaging.
• The US Producer Price Index (PPI) rose by 6.3% year-on-year in September, compared to a rise of 5.6% in August, according to the Bureau of Labor Statistics. This increase was higher than the expected 5.3% rise.
• Traders now price in a 27.7% probability of a rate hike at the October meeting, down from a previous 41.5% probability, as per the CME FedWatch Tool.
• The NZD/USD pair rose to around 0.5650 during Asian trading hours on Friday, with initial resistance at the upper Bollinger Band around 0.5710 and a more significant barrier at the 100-period MA at 0.5780.
• UBS analyst Simon Penn had previously written that an October hike on the eve of a midterm election, absent for 35 years, was politically untenable, and expected a December hike.
• The US Dollar (USD) faced selling pressure against the NZD following Warsh's remarks, with the USD/JPY holding firm near the 155.00 mark and the US Dollar Index (DXY) gaining to 99.60.
• GBP/USD stayed near 1.3480, unable to make headway ahead of the UK inflation report and the Fed decision.
• The 10-year US Treasury yield touched 5.04% for the first time since 2007, driven by surging energy costs and inflation worries.
• US stocks declined on Friday as tech and AI-related shares extended losses amid concerns over Chinese semiconductor competition and debt-funded AI infrastructure expansion.
• The New Zealand Dollar's rise to near 0.5650 was influenced by the lack of clarity from Fed Chair Kevin Warsh on the October meeting's interest-rate decision.
• The table showing the percentage change of the US Dollar against listed major currencies today provides context for the currency movements.
• The technical analysis of the NZD/USD pair was written with the help of an AI tool.

What's still developing

• Fed Chairman Kevin Warsh said on Friday that he does ‌not "prejudge" interest-rate decisions, giving no preview of whether the central bank will hike or, as markets expect, hold short-term rates steady at its upcoming October 27-28 meeting.
• The admission of being “over-scarred from the global financial crisis” underscores a cautious bias on financial stability even as Warsh highlights structural growth and an investment surge driven by “good policies,” suggesting a guarded hawkish stance on output, employment, and inflation ahead of the October and December meetings.
• The so-called rate differential, or how rates in New Zealand are or are expected to be compared to the ones set by the US Federal Reserve, can also play a key role in moving the NZD/USD pair.
• On the Kiwi front, Reserve Bank of New Zealand (RBNZ) Chief Economist Paul Conway said that the interest rate decision in late October is “wide open” even as inflation pressures build.
• This figure registered the largest increase since 2022 and was higher than the expectation of an increase of 5.3%.
• An October hike would produce 4.00% to 4.25%, per the Boston Globe.
• Capital Economics’ Stephen Brown called core upside broad based, putting October in play, and forecasts two more quarter-point hikes.
• Fed Chair Kevin Warsh faces a decision in late October that the central bank has avoided almost without exception for over three decades, and hot inflation data just doubled the odds it could happen again.
• With the move largely priced in, the reaction will hinge less on the decision itself than on the updated economic projections, the dot plot, and Chair Kevin Warsh's guidance on whether more tightening is coming.
• The US Dollar Index (DXY) gained to 99.60 mark on Tuesday, and the bond market drove the move.
• In a moderated discussion Friday morning in Bangkok at the International Monetary Fund’s annual meetings, Warsh made no remarks on monetary policy or his outlook for the US economy, apart from reiterating that the Fed will deliver price stability.
• Reuters reported Oct. 3 that the Fed may skip October for December.

Sources

• Reuterslink
• FXStreetlink
• 247Wallstlink
• Fxstreetlink
• Tradingkeylink
• Bloomberglink
• WarpBeat — background on NZ Dollar Rises as Fed Chair Warsh Avoids Rate Hike Preview link
• WarpBeat — background on Kevin Warsh says Fed is focused on taming rising prices, but gives no hint about next rate hike link
• FOREX.com — video link