NZD/USD recovers to near 0.6460 on upbeat NZ GDP data and Fed’s less-hawkish policy
|- NZD/USD is aiming to surpass the 0.6460 resistance on solid NZ GDP data.
- The US Dollar Index is exposed to downside risks as the Fed has shifted its approach to less-hawkish policy moves.
- The next catalyst that could be painful for the Fed is the stubborn Average Hourly Earnings.
The NZD/USD pair has recovered to near the critical resistance of 0.6460 after some rhetoric volatile moves in the late New York session. The Kiwi asset is aiming to surpass the 0.6460 hurdle as Statistics New Zealand has reported upbeat Gross Domestic Product (GDP) data.
The quarterly GDP data for the third quarter of CY2022 has landed at 2.0%, higher than the expectations of 0.9% and the prior release of 1.7%. Also, the annual GDP data has soared to 6.4% vs. the consensus of 5.5% and the former figure of 0.4% in the same period.
No doubt, an expansion in the antipodean will support the New Zealand Dollar but will also create more troubles for the Reserve Bank of New Zealand (RBNZ). The NZ central bank is working day and night in bringing price stability in times of stubborn inflation by announcing policy tightening measures at regular intervals. An expansion in the extent of economic activities indicates that the overall demand is robust, which is not an incentive to manufacturers for cutting the price of goods and services.
Meanwhile, the US Dollar Index (DXY) is displaying sideways moves around a fresh six-month low at 103.49. The USD Index is expected to remain on tenterhooks as the Federal Reserve (Fed) has confirmed a smaller and slower interest rate hike approach after softening inflation data consecutively for two months.
Fed chair Jerome Powell has hiked its terminal rate projection from 4.6% to 5.1%, which is to be achieved by the conclusion of CY2023. The Fed is subjected to keep policy restrictive till the achievement of price stability. While Fed chair Jerome Powell has not given any verdict on the recession whether it will arise or not. The next trigger that could create troubles for the Fed is the escalating Average Hourly Earnings, which could keep retail demand solid ahead.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.