The new Zealand dollar became the winner of the forex market on Tuesday. That made more than 0.7 percent increase to the level around 0.6940 to the USD. What is the cause? 

So far, the cause was a profit – taking action In the beginning of the week. After that, it is followed by the rising global commodity priced and the hawkish comments stayed by the RBNZ members. 

Christian Hawkesby as the governor assistant of the RBNZ stated that the central bank decision for not increasing the rate last week is not caused by the economy risk. 

That is more about the communication reason. The RBNZ representatives before have been considering to increase the interest rate for about 50% point basis in that time. 

Lockdown is not the Cause 

Those representatives share the documents which will be easily supprting the interest rate last week. The cancelled interest rate increase announcement in that time wasn’t because the COVID-19.

It was more because of the right timing to communicate further about their policies. It is especially on 18 of August when the country just entering the lockdown periods. 

He said further that there are some important lessons from the last year experiences. The first lockdown at the beginning of the pandemic did not create the deflation. 

It was not making the unemployment and the massive recession just like many parties worried before. The demand side in the economy aspect was also stronger from the expectation.

The Offering Aspect Experiences a Problem

So far, the one that experiences a problem is the offering aspect. It is longer that what people are expexted and that is the one which is causing the Inflation pressure this time. 

In fact, that pressure has a chance to suppprt the inflation expectation which supports the interest rate increase prospect. So, will the central bank consider to make a 50% point basis increase again on October? 

For this case, Hawkesby didn’t give his answer. He think that the consideration will be based on how far their position from the target is. It is also about their knowledge about economy. 

He said further that the new pandemic wave in the New Zealand is Not a game changer. There is not any pressures to change the country’s policies as soon as possible 

The USD Index has a Limited Move

The index of US dollar or DXY moved in a limited range in a tight range between 92.80-93.00. That was happened along the Asian Session trade in 25 of August. There is a reason for it. 

The market concern due to the SARS – COV – 2 delta variant is starting to fade. However, so many parties are worrying about the progress of the Jackson Hole symposium that will be done tomorrow. 

The US food and Drug Administration (FDA) yesterday gave the full license for the COVID-19 vaccines. Those are especially for the BioNTech and Pfizer. That agreement may bring a good impact. 

It is especially to accelerate the vaccination program in the USA. The health expert from America, Anthony Fauci, claimed that the country may be able to control the pandemic. 

The Good News Reduce the Worried 

The good news is slightly eased the concerns about the impact of Delta's surge on the global economic recovery, reducing market demand for the U.S. dollar as a safe haven asset. 

On the other hand, those market concerns over the Fed's policy change are still quite strong. That is as FOMC minutes confirm the expectations of tapering announcements in 2021.

The question is: Will the actual announcement of the Fed's tapering plan be made at the Jackson Hole symposium that starts on August 26 tomorrow? It is one of the expectations. 

However, or that will be done at the next FOMC meeting on September 21-22? Most of the analysts think that Jerome Powell doesn’t talk about the time like timing yet in this month.