A renewed willingness to take risks and a weaker US dollar benefit NZD/USD.
Despite the liquidity crisis, central banks will continue to hike rates.
Future bank support and its repercussions for policy remain unanswered.
In Asian trading hours, NZD/USD rises in response to optimism fueled by a positive risk appetite and a softer US Dollar. The risk proxy NZD/USD reflects a relief rally fueled by swift banking crisis intervention. At the time of writing, the pair is up about 0.68 percent. With steady US Treasury yields, most Asian equity complexes are trading in the green.
In the absence of superior data from both the United States and New Zealand, Friday’s price action for NZD/USD is more likely the result of exploitation of the previous day. When the Swiss National Bank (SNB) rescued Credit Suisse with a CHF50 billion covered loan facility, risk sentiment increased.
Given that Credit Suisse’s financial situation became cluttered last year and that Deutsche Bank recently experienced a fundamentally similar situation,
By providing a pool of liquidity totaling US$30 billion on Thursday, key market players like JPMorgan, Citibank, Bank of America, and many others attempted to revive the First Republic Bank in the United States.
In a nutshell, investors are confident that, regardless of the circumstances, the authorities will provide some form of assistance to alleviate any financial difficulties. Additionally, similar efforts were made by all central banks during the COVID crisis, when they did whatever was necessary to revive the economy.
However, the most important question is whether or not the central banks will adopt a hawkish stance and how many chapters on liquidity have yet to be revealed to the market. despite the Credit Suisse crisis, the European Central Bank (ECB) did not alter its plan to raise interest rates on Thursday. Also, some reports say that the Federal Reserve won’t make a big change at the FOMC meeting in March.