NZD/USD retreats toward 0.7000 as USD regains strength
- RBNZ left its policy rate unchanged, decided to halt additional asset purchases.
- US Dollar Index rebounds toward 92.50 following Wednesday's drop.
- Focus shifts to US data, FOMC Chairman Powell's testimony.
After gaining nearly 100 pips on Wednesday, the NZD/USD pair edged higher during the Asian session on Thursday but struggled to preserve its bullish momentum. As of writing, the pair was down 0.38% on a daily basis at 0.7005.
RBNZ takes surprising hawkish step
Following its July policy meeting, the Reserve Bank of New Zealand left its policy rate unchanged at 0.25% as expected. However, the bank decided to reduce the current stimulatory level of its policy settings. "The Reserve Bank will halt additional asset purchases under the Large Scale Asset Purchase (LSAP) programme by 23 July 2021," the RBNZ said in its statement. Nevertheless, the positive impact of this hawkish policy shift on the NZD remained short-lived.
NZD/USD to advance nicely towards 0.73 as RBNZ places in the hawkish camp – Rabobank.
On the other hand, the US Dollar Index (DXY), which fell sharply following FOMC Chairman Jerome Powell's dovish comments while delivering the Fed's semiannual Monetary Policy Report, is staging a rebound on Thursday. Currently, the DXY is up 0.12 on the day at 92.47, forcing NZD/USD to stay in the negative territory.
Later in the session, NY Empire State Manufacturing Index, Initial Jobless Claims and Industrial Production data will be featured in the US economic docket. Additionally, FOMC Chairman Powell will appear on the second day of his congressional testimony.
On Friday, second-quarter Consumer Price Index (CPI) data from New Zealand will be looked upon for fresh impetus.
Technical levels to watch for
Author
Eren Sengezer
FXStreet
As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.
