NZD/USD could revisit four-month highs, trades near 0.6170
|- NZD/USD has marked a three-month high at 1.2733 on Wednesday.
- Greenback experienced strength from stronger GDP Annualized data.
- Traders price in a cumulative 100 bps of rate cuts by the Fed in 2024.
- Kiwi Building Permits rose significantly at 8.7% from the previous decline of 4.6%.
NZD/USD extends its gains for the sixth successive day, trading higher around 0.6170 during the early European session on Thursday. The NZD/USD pair reached near four-month highs on Wednesday on subdued US Dollar (USD). However, the Greenback experienced strength from upbeat Gross Domestic Product Annualized data, which indicated a growth of 5.2%, surpassing the anticipated increase of 5.0% in Q3.
Additionally, the lowered US bond yields over the past three sessions are attributed to the prevailing sentiment that the Federal Reserve (Fed) might conclude its interest rate hikes. Additionally, the markets are now factoring in a cumulative 100 basis points (bps) of rate cuts by the Fed in 2024.
The US Dollar Index (DXY) hovers around 102.80, showing indecision possibly influenced by mixed remarks from Federal Reserve (Fed) members. Cleveland Federal Reserve (Fed) President Loretta Mester emphasized that any decision for additional interest rate hikes would depend on data-driven considerations. In contrast, Fed Governor Christopher Waller has suggested a more accommodative approach by not insisting on maintaining high-interest rates.
On the Kiwi side, on Thursday, seasonally adjusted Building Permits for October showed monthly ratings increased significantly to 8.7% from a 4.6% decline previously.
The New Zealand Dollar (NZD) remains supported by the Reserve Bank of New Zealand's (RBNZ) hawkish stance. Despite keeping the cash rate unchanged at 5.5%, the central bank signaled the need for sustained restrictive measures to address inflation. RBNZ Governor Adrian Orr emphasized the upside risk to inflation and mentioned that rate hikes were discussed during the meeting.
Investors are expected to watch the US Initial Jobless Claims for the week ending on November 24 and the Personal Consumption Expenditure (PCE) Price Index data on Thursday. New Zealand’s ANZ Roy Morgan Consumer Confidence will be released on Friday.
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