NZD/USD seeks stabilization above 0.6200 as US Dollar retreats
|- NZD/USD is looking for stabilization above 0.6200 as the short-lived recovery in the US Dollar has concluded.
- S&P500 futures have posted significant losses in London as investors are worried about the United States' economic outlook.
- Dovish monetary policy by the PBoC is hurting the margins of commercial banks.
The NZD/USD pair is making efforts to achieve stability above the round-level resistance of 0.6200 in the London session. The Kiwi asset is expected to remain in the bullish trajectory as the US Dollar Index (DXY) is struggling to remain above 102.00.
S&P500 futures have posted significant losses in London as investors are worried about the United States' economic outlook. Considering testimony of Federal Reserve (Fed) chair Jerome Powell at Congress indicates that more interest rate hikes are appropriate and further policy-tightening is sufficient enough to dampen economic prospects. The risk-aversion theme has trimmed the appeal for risk-sensitive assets.
The US Dollar Index (DXY) is expected to show a perpendicular fall after dropping below 102.00. The downside bias in the USD Index has been built after dovish commentaries from Atlanta Fed President Raphael Bostic and Chicago Fed Bank President Austan Goolsbee. Both Fed policymakers are in favor of one more skip in the rate-hiking spell by the US central bank to assess the impact of interest rate hikes yet made.
Meanwhile, the New Zealand Dollar is showing strength due to the easy interest rate policy by the People’s Bank of China (PBoC). China’s central bank cuts its Loan Prime Rate (LPR) to revive the economy’s optimism, which was critically dented by pandemic controls.
Reuters reported that the dovish monetary policy by the PBoC is hurting the margins of commercial banks as households and firms are reluctant to raise credit due to bad balance sheets.
It is worth noting that New Zealand is one of the leading trading partners of China and higher monetary stimulus in China will support the New Zealand Dollar.
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.