Next week, the Australian dollar is likely to face upside pressure as expectations of further rate hikes fade, while the New Zealand dollar will be driven by the general election on the 7th and the South African rand by the impact of the AGOA exclusion notice.
In next week's Australian dollar market, the RBA raised rates to 4.85% as expected immediately beforehand, but views are spreading that expectations of further rate hikes will recede. The market is being capped on the upside amid expectations that the rate-hike cycle has peaked, while pricing in interest-rate futures has not advanced. The RBA statement indicated that high inflation risks would persist and that achieving the inflation target would be delayed until the second half of 2027, while references to further rate hikes had been removed.
The New Zealand dollar is expected to trade erratically against the backdrop of political developments, with the outcome of the New Zealand general election scheduled for the 7th the key focus. Opinion polls show a close race between the government and opposition parties, and the prospects of a government being formed are considered limited. Depending on the post-election coalition, RBNZ policy operations could be affected.
The South African rand is susceptible to developments in the United States and China and trade concerns, and is expected to remain sensitive to external conditions. The United States has notified South Africa of its policy to exclude the country from AGOA, and the loss of duty-free access to the US for major industries could weigh on the economy over the medium term.
In the review of the second week of November, the Australian dollar was soft against both the US dollar and the yen, while uncertainty surrounding NZD continued and risk aversion intensified toward the weekend.