NZD/USD scales above 0.6300 as focus shifts to Fed Powell

The NZD/USD pair has witnessed some bids around 0.6292 and has moved above the round-level resistance of 0.6300 in the Asian session. On a broader note, the asset is displaying topsy-turvy moves in a range of 0.6285-0.6327 since Friday.

Investors have shifted their focus on the speech from Federal Reserve (Fed) chair Jerome Powell, which is due on Wednesday. The speech will provide some insights into the likely monetary policy action by the Fed in July.

Taking into account the soaring price pressures and the upbeat growth prospects, the Fed is expected to dictate one more 75 basis points (bps) interest rate hike. Effective employment generation capacity, strong growth outlook, and of course the inflationary pressures are sufficient to support the verdict.

The households in the US economy are the real victim of the higher inflation rate as the roaring price rise is reducing their real income, eventually leaving less money to them for disposal. The release of the upbeat US Durable Goods Orders on Monday indicated that the aggregate demand is resilient in the US economy but recession fears still loom if inflation doesn’t get under control.

On the kiwi front, the Reserve Bank of New Zealand (RBNZ) will be the first Western central bank, which will shift its interest rates to a neutral state. Officially, the Official Cash Rate (OCR) stands at 2% after a 50 bps rate hike announcement by RBNZ Governor Adrian Orr on May 25. No doubt, the RBNZ will face the consequences of elevating its interest rates vigorously as a quick enrolment of policy tightening measures will reduce the overall demand.