- NZD/USD holds steady in the meat of the recent ranges post-Fed day.
- US dollar is under pressure on a more dovish than expected Powell presser.
NZD/USD is entering early Asia after the closing bell on Wall Street marginally higher on the day following an offer in the greenback following slightly dovish rhetoric from the Federal Reserve's chairman.
NZD/USD recovered from a low of 0.6900 to a high of 0.6969.
The Federal Open Market Committee left the Federal Funds Rate at 0.00-0.25% in what was seen as a hawkish hold as per the statement and a note that said the "economy has made progress toward goals since setting the bar for taper in December and will continue to assess progress in coming meetings."
Meanwhile, the pace of asset purchases was left at USD120bn/month, made up of Treasuries and agency mortgage-backed securities.
Initially, the dollar was bid but then sank on what was perceived to be more dovish than expected from the chairman, Jerome Powell's comments at the press conference.
DXY 15-min chart
During the presser, with respect to the catalyst for tapering, Powell put all of the emphasis on the Unemployment Rate as opposed to risks of run-away inflation.
In the latest data, it is seen that some 9.5 million US workers were unemployed in June 2021, compared with 5.7 million in February 2020, and the unemployment rate stood at 5.9%, up from 3.5%, seasonally adjusted.
Therefore, traders figure the Fed is far from creating a taper tantrum in the rates markets such as we saw back in 2013 when there was a surge in US Treasury yields from the Federal Reserve's (Fed) announcement of future tapering of its policy of quantitative easing.
This took the greenback down to test below what could turn out to be significant trendline support for the near future:
DXY 4-hour chart
Meanwhile, however, overall, as analysts at ANZ Bank explained, ''markets were largely unperturbed by the Fed statement this morning.''
''The Fed continues to see the spike in inflation (5.4% YoY in June) as “largely reflecting transitory factors”, and while they did note that “the economy has made progress” on the Fed’s goals, once again there was no concrete discussion of tapering asset purchases.''
Specifically for the kiwi, the analysts said, ''the tapering of bond purchases is coming, but not yet, and the Fed still sees higher inflation as being transitory. Against that backdrop it may be difficult for the NZ market to continue to price in such lofty expectations, posing downside NZD risks.''
|Today last price||0.6963|
|Today Daily Change||0.0006|
|Today Daily Change %||0.09|
|Today daily open||0.6957|
|Previous Daily High||0.7007|
|Previous Daily Low||0.694|
|Previous Weekly High||0.7004|
|Previous Weekly Low||0.6881|
|Previous Monthly High||0.7289|
|Previous Monthly Low||0.6923|
|Daily Fibonacci 38.2%||0.6965|
|Daily Fibonacci 61.8%||0.6981|
|Daily Pivot Point S1||0.6929|
|Daily Pivot Point S2||0.69|
|Daily Pivot Point S3||0.6861|
|Daily Pivot Point R1||0.6996|
|Daily Pivot Point R2||0.7035|
|Daily Pivot Point R3||0.7064|
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.