Talking Points:
• Monetary policy is a key fundamental drive for FX, but there is more to it than just the interest rate
• Despite swaps pricing in a certainty of a RBNZ hike at the next meeting, the NZD has slipped
• There are three tiers to rates'impact on FX: current policy, central bank bias and speculation
Learn more about the fundamentals and find help developing your trading strategy from DailyFX analysts with DailyFX on Demand.
Why is the Aussie dollar tumbling if it has one of the highest yields of the majors? Why has the Kiwi dollar dropped considering the market now seems certain of a hike at the next meeting? These are common questions amongst traders who are trying to incorporate this key fundamental dynamic into their analysis of the markets. In today's Strategy Video, we discuss how rates, policy guidance and speculation play a role in shaping a currency's strength or weakness with specific review of the Dollar, Pound, Australian dollar and New Zealand Dollar.
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