NZD/USD rises to near 0.6120 on ANZ prediction of RBNZ rate hike in February

• NZD/USD gains ground on the expectation of RBNZ to increase interest rates in February.
• ANZ anticipates the RBNZ to increase OCR by a 25-basis point in both February and April.
• Reuters poll anticipates that the PBOC will maintain the one-year MLF rate at 2.5%.

NZD/USD recovers its recent losses seen in the prior session, trading higher around 0.6120 during the Asian trading hours on Friday. The New Zealand Dollar (NZD) is strengthening as ANZ anticipates the Reserve Bank of New Zealand (RBNZ) to increase its cash rate in both February and April. Currently standing at 5.5%, the Official Cash Rate (OCR) is expected to see a 25-basis point hike at each of these meetings. This prediction diverges from the consensus forecast, as market expectations suggest just under a 90% probability of a decision to maintain rates unchanged this month.

The fourth-quarter labor market data from New Zealand surpassed the expectations of the Reserve Bank of New Zealand. Moreover, the recent Kiwi Unemployment Rate grew less than the RBNZ's forecast. In November, the RBNZ cautioned that inflationary pressures exceed expectations, and there might be a need for further increases in the Official Cash Rate (OCR).

Chinese markets will be closed for the entirety of next week due to the extended Lunar New Year holidays. Reuters has reported that the rate-setting for the Medium-term Lending Facility (MLF), typically conducted on the 15th of each month, will instead occur on February 18 this month. According to a Reuters poll of 31 analysts, 22 anticipate that the People's Bank of China (PBOC) will maintain the one-year medium-term lending facility (MLF) rate at its current level of 2.5%, while 9 analysts predict a slight interest rate reduction.

The US Dollar Index (DXY) is showing signs of further strengthening for the second consecutive day, despite a decline in US bond yields. This resilience is primarily driven by hawkish comments from US Federal Reserve (Fed) officials, which are reinforcing confidence in the US Dollar. Additionally, upbeat data from the US job market is likely contributing to the Greenback's positive momentum.