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NZD/USD Dips on Banking Worries, NZ Business Confidence Next

Published 04/27/2023, 12:27 AM
  • First Republic Bank’s shares plunge
  • NZD/USD falls to a one-month low
  • New Zealand releases business confidence on Thursday
  • First Republic Bank woes continue

    Has the bank crisis resurfaced? There is plenty of concern in the financial markets as First Republic Bank’s shares continue to swoon. The Bank’s stock is down 30% today after plunging 50% a day earlier. The share price is down some 90% year to date and hit a record low today. The slide came after earning reports showed that deposits fell by 40% in the first quarter.

    The US government hasn’t indicated any willingness to bail out the bank, and it’s unclear if the 11 banks that injected some $30 billion in deposits to First Republic have the appetite for a repeat performance. The dark cloud over the First Republic (NYSE:FRC) has dampened risk appetite, and NZD/USD has edged lower and is trading at 6-week lows.

    We can’t know for sure what Fed policymakers think of First Republic’s woes, as there is a blackout period in effect until the May 2 meeting. The markets remain confident of a 25-basis point hike next week, and the odds have actually increased from 75% yesterday to 82% today. If the bank crisis worsens, that would likely lead to a downgrade in the likelihood a 25-bp hike at the upcoming meeting.

    New Zealand releases ANZ Business Confidence for April early on Thursday. Business confidence has been mired deep in negative territory and is expected to improve slightly to -41.0, compared to -43.4 in March. If the estimate is wide of the mark, we could see stronger movement from NZD/USD.

    AUD/USD Daily Chart

    NZD/USD Technical

    • 0.6102 has held in support since March 10th. Below, there is support at 0.6000
    • 0.6213 and 0.6340 are the next resistance lines

    Original Post

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