- NZD/USD is marching higher to recapture the 0.6500 hurdle amid the risk-on market mood.
- An absence of inflation softening in New Zealand might force the RBNZ to hike interest rates further.
- The US Dollar will display a power-pack action after the release of the US GDP and Core PCE data.
The NZD/USD pair has rebounded after a minor correction to near 0.6470 in the early Asian session. The kiwi asset is looking to recapture the psychological resistance of 0.6500 amid positive market sentiment. The New Zealand Dollar displayed sheer volatility on Wednesday after the release of the Q4CY2022 Consumer Price Index (CPI) data.
The annual CPI of New Zealand for the fourth quarter increased marginally to 7.2% from the expectations of 7.1% but remained constant in comparison with the prior release. Also, the inflation rate escalated marginally to 1.4% vs. the expectations of 1.3% on a quarterly basis. An absence of inflation softening in the Kiwi zone indicated that the Reserve Bank of New Zealand (RBNZ) might continue to hike interest rates further to contain soaring inflation.
It is worth noting that RBNZ Governor Adrian Orr has already increased the Official Cash Rate (OCR) to 4.25% and might be forced to continue to tighten policy further amid a hot-inflated environment.
Meanwhile, investors’ risk appetite has improved again as S&P500 recovered losses witnessed earlier on Wednesday. The US Dollar Index (DXY) has cracked to a near seven-month low of around 101.40 as the pace of policy tightening by the Federal Reserve (Fed) is set to calm down further. Analysts at Wells Fargo warned that the greenback has already embarked on a prolonged period of depreciation that could last into 2024. They further added that relative economic growth performance and monetary policy outlook have turned less supportive of the US dollar.
Going forward, investors will witness a power-pack action by the US Dollar after the release of the United States Gross Domestic Product (GDP) data, which is expected to contract to 2.6% from the prior release of 3.2%. Apart from that, investors will also focus on Durable Goods Orders and Core Personal Consumption Expenditure (PCE) data.
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. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD rebounds from multi-week lows, trades above 1.0750
EUR/USD came under heavy bearish pressure and declined to its weakest level in three weeks below 1.0750 on Friday after the stronger-than-expected Nonfarm Payrolls data. Week-end flows, however, helped the pair erase its daily losses.
GBP/USD remains on track to snap three-week winning streak
GBP/USD recovered toward 1.2550 after coming in within a touching distance of 1.2500 in the second half of the day after Nonfarm Payrolls came in at 199,000 for November. Despite the recent rebound, the pair remains on track to snap a three-week winning streak.
Gold retreats below $2,020 as US yields push higher
Gold broke below its daily range and declined toward $2,010 with the immediate reaction to the upbeat US November jobs report. Although XAU/USD managed to recover toward $2,020, rising US Treasury bond yields triggered another leg lower.
Bitcoin price could retrace to $42,000 if US Nonfarm Payroll comes in at 180,000
Bitcoin price just like other assets, is highly impacted by the macro-financial developments. This includes the Nonfarm Payrolls (NFP) report released by the BLS of the United States.
The week ahead – Fed, ECB and Bank of England rate decisions
When the Federal Reserve kept rates unchanged back in November for the second meeting in a row there was still the distinct possibility that the final meeting of 2023 would provide the possibility of one more rate rise to round off the year in line with Fed policymakers dot plot forecasts of 5.6%.