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On November 25th, Deutsche Bank Research Institute pointed out that 2026 will see another strong rally driven by artificial intelligence, with the S&P 500 index expected to break through the 8,000-point mark by the end of next year. Jim Reid, Global Head of Macro and Thematic Research at the bank, said on Monday: “Rapid investment and application in the AI field will continue to dominate market sentiment. Given the rapid momentum of technological progress, we have good reason to believe that this will translate into substantial productivity gains in the future. However, the ultimate winners and losers will depend on a complex interplay of multiple factors, many of which may not become apparent until after 2026.” Reid added, “The 8,000-point year-end target set by our US equity strategist (the most optimistic analyst on the team) is particularly noteworthy, given their excellent track record of predictions.”On November 25th, U.S. stocks rose across the board on Monday, rebounding during the Thanksgiving holiday week after a decline that had dampened the previous AI bull market. Google shares performed strongly on Monday, closing up more than 6%. Investors have become more optimistic about the companys position in the AI competitive landscape. Google released an upgraded AI model, Gemini 3, last week, just eight months after the release of Gemini 2.5. "This is certainly good for Google and its investors, but Im always wary when I see a single stock leading the market," said Melissa Brown, managing director of investment decision research at SimCorp. "This doesnt necessarily mean a comprehensive improvement in market fundamentals. In my view, its unlikely to be a sustainable driver of a sustained market rally." Market volatility could increase as trading volumes are expected to be thin in the coming days and there is a lack of significant catalysts ahead of the Federal Reserves December policy meeting. Brown pointed out that upcoming economic data—including September retail sales and producer price indices released on Tuesday—could signal a "stagflationary environment" and could become a new trigger for volatility.On November 25th, Russian Presidential Aide Ushakov stated on the 24th that Russia is aware of the peace plan proposed by Europe to end the Ukraine crisis, but that the plan is neither constructive nor in Russias interest. Ushakov made this response in an interview with Russian media. Western media view this "European plan" as a "counter-proposal" from Europe to the 28-point new plan proposed by the United States.Reserve Bank of New Zealand Governor Hawkesby will give a media interview on November 27.The Dow Jones Industrial Average rose 202.86 points, or 0.44%, to close at 46,448.27 on Monday, November 24; the S&P 500 rose 102.09 points, or 1.55%, to close at 6,705.08; and the Nasdaq Composite rose 598.92 points, or 2.69%, to close at 22,872.01.

AUD/NZD strengthens above 1.0800 as focus shifts to RBA Lowe's speech and RBNZ policy

Daniel Rogers

Nov 22, 2022 14:59

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In the early Tokyo session, the AUD/NZD pair is displaying inventory accumulation between 1.0810 and 1.0830. Investors have shifted their focus to Reserve Bank of Australia (RBA) Governor Philip Lowe's speech, which has caused the asset to swing unpredictably. The primary impetus for the cross will be the Reserve Bank of New Zealand's (RBNZ) interest rate decision on Wednesday.

 

Investors await the RBA policymaker's speech in order to get an informed opinion. The speech will include interest rate suggestions to counteract the exceptional increase in inflationary pressures. Third-quarter inflation hit 7.3%, compelling the Australian central bank to lift its price growth projection to 8%. To preserve healthy economic prospects and achieve price stability, the RBA maintained its rate hike timetable at 25 basis points (bps).

 

On the kiwi front, the Reserve Bank of New Zealand's (RBNZ) monetary policy statement will deepen policy divergence between the RBNZ and the RBA. Governor Adrian Orr of the Reserve Bank of New Zealand (RBNZ) has already announced five consecutive rate hikes of 50 basis points (bps) to a current level of 3.5 percent and has no plans to pause rate hikes despite rising inflationary pressures.

 

The Official Cash Rate (OCR) will climb by 75 basis points (bps) this time, according to a Reuters survey of the RBNZ's rate hike estimates. A comparable scenario would cause the OCR to increase to 4.25 percent and depart significantly from the RBA's policy structure.

 

The decision may boost the New Zealand Dollar in the future, but reduces the Reserve Bank of New Zealand's room for future rate increases. In addition, additional economic dynamics requirements will be shifted into the future.