Global Rate Hike Expectations: RBNZ Leads at 57bps, USD Steady

Market pricing for interest rate hikes by year-end shows the Reserve Bank of New Zealand leading with 57 basis points of expected tightening, followed by the Federal Reserve at 42 bps and the European Central Bank at 41 bps. The Bank of England is priced for 37 bps, while the Reserve Bank of Australia sits at 28 bps. The Bank of Japan trails at 25 bps, with the Bank of Canada at 20 bps and the Swiss National Bank at just 15 bps. Despite a relatively quiet week with no major data releases or central bank events, these expectations remained largely stable from the prior week. The NZD continues to command the highest rate differential expectations, potentially supporting NZD crosses. The narrow spread between Fed and ECB expectations (just 1 bp) suggests EUR/USD may remain range-bound in the near term. Traders should monitor upcoming economic data releases that could shift these expectations, particularly for pairs like NZD/USD, EUR/USD, and GBP/USD where rate differentials are key drivers.