NZD/USD aims to test weekly highs at 0.5750 ahead of RBNZ policy

• NZD/USD is eyeing to test the weekly highs at 0.5750 as the RBNZ is expected to sound hawkish.
• A fifth consecutive 50 bps rate hike is expected by the RBNZ to continue the fight against inflation.
• The DXY is declining towards 111.00 amid lower projections for the US NFP data.

The NZD/USD pair has bounced back sharply after dropping to near 0.5682 in the Tokyo session. The asset is broadly oscillating in a 0.5680-0.5726 range and is expected to deliver an upside break of the same. A north-side explosion will drive the asset towards weekly highs at around 0.5750. Weaker performance from the US dollar index (DXY) and soaring hawkish Reserve Bank of New Zealand (RBNZ) bets are strengthening the kiwi bulls.

Wednesday’s monetary policy decision by the RBNZ is going to provide a decisive move to the antipodean. RBNZ Governor Adrian Orr is expected to announce a 50 bps rate hike consecutively for the fifth time.

The inflationary pressures in the kiwi region have not cooled down yet, therefore, scaling down the ‘hawkish’ tone won’t be a fruitful option.  An announcement of the fifth 50 bps rate hike will push the Official Cash Rate (OCR) to 3.5%.

Meanwhile, the DXY has printed a fresh weekly low at 111.44 in the early European session. The DXY is eyeing more weakness towards 111.00. Investors are dumping the DXY ahead of the US Nonfarm Payrolls (NFP) data.

As expected, the US economy created 250k jobs in September, lower than the August reading of 315k. The US economy has been maintaining full employment levels, therefore, space for generating more employment is extremely less. Adding to that, the escalating Federal Reserve (Fed)’s interest rates are also restricting the corporate to continue their hiring programs with sheer pace.