Surprise RBNZ hold sinks NZD/USD 0.99% as the Fed splits 10–2

The Reserve Bank of New Zealand held its cash rate when markets expected a hike, and NZD/USD fell 0.99% on our feed. The Bank of Canada raised rates as forecast and the Federal Reserve held with two votes for a hike, and FXStreet said Fed Chair Kevin Warsh's press conference then took the dollar index to its low of the day.

Three central banks and Australian inflation

• The Reserve Bank of New Zealand held its Official Cash Rate at 2.75% in a 4–3 vote, against a forecast of 3.00%, and Action Forex said it kept a conditional tightening bias. NZD/USD fell 0.99% to 0.56254, its lowest close since 15 October, after a low of 0.55860 at 01:17 UTC. FXStreet said AUD/NZD rose to its highest since March 2013.

• The Bank of Canada raised its overnight rate by 25 basis points to 2.50%, as forecast, its first increase since July 2023, Action Forex said.

• The Federal Reserve held its target range at 3.75%–4.00%, as expected, in a 10–2 vote, with two members dissenting in favour of a hike, FXStreet said. The same outlet said that leaves December as the last meeting this year for the increase most officials projected.

• Australia's consumer prices rose 4.3% on the year in September, against 4.2% expected, and 0.8% on the month, against 0.7%. investingLive reported trimmed-mean inflation at 3.7% on the year, against 3.6% expected, and said the case for a Reserve Bank of Australia hike had firmed.

The dollar gave back its climb

FXStreet said the US dollar index touched a two-week high before the decision, then fell from just above 102.40 to near 102.05, its lowest of the day, in three five-minute bars of Warsh's press conference.

• EUR/USD rose 0.24% to 1.11529, ending a run of five lower closes. Its low, 1.11134 at 07:02 UTC, held less than a pip above 1.1113, the yearly low FXStreet cited, and above Action Forex's 1.1111. FXStreet said the pair climbed through 1.1150 as Warsh spoke.

• USD/CAD fell 0.41% to 1.39945, below each of its previous ten closes. FXStreet said the Canadian dollar struggled to gain traction after the hike, and that the pair fell to just above 1.4000 during Warsh's press conference. Its low, 1.39890 at 20:00 UTC, stayed 4 pips above 1.3985, the Action Forex level our weekly wrap set as its tell, so the tell has not fired.

• The pound rose 0.15% to 1.33264, its first gain in four sessions. FXStreet said after the close that the gain came from the weaker dollar following the Fed and that Chancellor John Healey's first budget had little to do with it; Action Forex said the budget cut the fiscal headroom from £23.6bn to £15bn. Its low, 1.32734 at 07:17 UTC, came hours before the budget, below 1.3294, the support Action Forex had watched.

• AUD/USD rose 0.39% to 0.70533, its seventh close in a row above 0.70 and above each of its previous ten closes. FXStreet said the hot inflation data lifted it to its highest since 23 September in Asian trade.

Gold and oil

• Gold slipped 0.09% to $4,056.45 on our feed, its third close in a row above $4,000, after falling $10.55 in the final minute; it reopened at $4,067.85. Its low, $4,024.21, came at 18:33 UTC, after the Fed decision, and its high, $4,082.57, at 20:01 UTC.

• WTI snapped a two-day losing streak on Middle East tensions, FXStreet said, and traded near $102 after the Fed, below a session high just short of $103 set before the decision. The same outlet said a Qatari draft deal to end the war, which Iran was expected to answer before the weekend, mattered more to crude than the Fed did.

Market gauges and what's next

Our proprietary metrics at the close of the session:

• Readings: an MRS of 72, up from 61, with its news component at its full 20 on both days, so the rise did not come from the calendar. A CTS of 54, with its carry backdrop at 60 out of 100, and an FSI of 54, Neutral; both unchanged.

• Our strength table: it has no reading for this session, so we name no leader and no laggard.

• The dollar: it closed lower against six of the seven majors, from 0.07% against the yen to 0.41% against the Canadian dollar, and higher only against the New Zealand dollar. USD/JPY closed at 157.829, its second close in a row above 157.50.

This week: US advance GDP (forecast 3.2%) and core PCE (forecast 0.3%) are due at 12:30 UTC on Thursday, and the European Central Bank decides at 13:15 UTC (forecast: refinancing rate unchanged at 2.65%). The Bank of Japan follows on Friday.