Third consecutive RBNZ hike priced in by New Zealand Dollar traders

• Why does NZD/USD finish below 0.5700 after stalling just above it for a fourth session?
• The Kiwi remains under pressure despite TD Securities forecasting three RBNZ hikes to 3.50%.
• Ahead of the election, Wednesday's RBNZ decision is expected to take rates to 3.00%.

NZD/USD lost ground on Monday as traders favoured the Dollar ahead of Wednesday's Fed decision, despite TD Securities replacing its forecast for a Reserve Bank of New Zealand (RBNZ) pause with a call for three rate hikes. For the fourth consecutive session, the pair stalled just above 0.5700 before finishing below that mark.

With a quarter-point RBNZ increase to 3.00% already priced in, the Kiwi's prospects hinge on the subsequent policy path. Traders assign the hike a probability of nearly 90%, while 22 of 27 economists surveyed by Reuters anticipate the move. In the same poll, nine of 23 economists predict a further increase to 3.25% in December.

Despite third-quarter inflation easing to 3.7%, below the RBNZ's 3.9% projection, economists still expect a rate increase. They anticipate that fuel costs and a softer Kiwi will push inflation above 4% again in the fourth quarter. The currency's weakness therefore contributes to the argument for tighter policy.

Which scheduled events are in focus?

At 01:00 GMT on Wednesday, the RBNZ will release its rate decision and Monetary Policy Review. The cash rate is forecast to move from 2.75% to 3.00%, ten days ahead of New Zealand's 7 November election. The central bank's own rate projection spans the December and February meetings underpinning TD's forecast.

Wednesday is also expected to bring an unchanged Fed rate range of 3.75%-4.00%. Its statement is due at 18:00 GMT, followed by Fed Chair Warsh's press conference. The range already exceeds the 3.00% level anticipated for the RBNZ. Before those decisions, Tuesday's September durable goods orders are forecast to show a 0.6% increase.

What do the charts suggest?

Below the 50-day Exponential Moving Average (EMA), NZD/USD's recovery from its 14 October low just above 0.5550 has run out of momentum. The 200-day EMA sits just below 0.5800. About a fifth of the recovery was erased by Monday's decline, while daily momentum is overbought for the first time since late July.

Daily chart of NZD/USD