- NZD/USD is eyeing a test of yearly lows in the low-0.6200s having erased earlier session gains.
- The buck remains in the ascendency ahead of Wednesday’s expected 75 bps rate hike from the Fed.
- NZD/USD has now dropped over 5.0% in the last eight sessions, with recession fears and China lockdowns woes also weighing.
One day out from what is now expected to be a 75 bps rate hike from the Fed plus a new hawkish spin on longer-term interest rate guidance in face of the recent rise in US price pressures (as per last Friday’s US Consumer Price Inflation figures), the US dollar is back in the ascendency. NZD/USD has subsequently reversed earlier session gains that saw the pair attempt to claw its way back to the 0.6300 level and has fallen to test its earlier annual lows in the 0.6220s.
At current levels, the pair is trading lower by about 0.5% and is on course for an eighth successive session in the red during which time it has shed over 5.0% and fallen back from above 0.6550. While inflation’s failure to subside as hoped and the subsequent build-up of Fed tightening bets is one of the key reasons for recent downside, it should also be noted that NZD/USD is also vulnerable to broader macro risk appetite given the kiwi’s status as highly risk-sensitive.
Recession fears have been amping up in recent days, not least in wake of last Friday’s record bad US Consumer Sentiment data from the University of Michigan. Given New Zealand is a small open economy, it (and its currency) is seen as exposed to global growth conditions. China lockdown fears are also hurting the kiwi given its importance as a regional trade partner, as China continues to struggle to stamp out Covid-19 cases.
Note: All information on this page is subject to change. The use of this website constitutes acceptance of our user agreement. Please read our privacy policy and legal disclaimer. Opinions expressed at FXstreet.com are those of the individual authors and do not necessarily represent the opinion of FXstreet.com or its management. Risk Disclosure: Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.
Recommended content
Editors’ Picks
EUR/USD extends gains above 1.0700, focus on key US data
EUR/USD meets fresh demand and rises toward 1.0750 in the European session on Thursday. Renewed US Dollar weakness offsets the risk-off market environment, supporting the pair ahead of the key US GDP and PCE inflation data.
USD/JPY keeps pushing higher, eyes 156.00 ahead of US GDP data
USD/JPY keeps breaking into its highest chart territory since June of 1990 early Thursday, recapturing 155.50 for the first time in 34 years as the Japanese Yen remains vulnerable, despite looming intervention risks. The focus shifts to Thursday's US GDP report and the BoJ decision on Friday.
Gold closes below key $2,318 support, US GDP holds the key
Gold price is breathing a sigh of relief early Thursday after testing offers near $2,315 once again. Broad risk-aversion seems to be helping Gold find a floor, as traders refrain from placing any fresh directional bets on the bright metal ahead of the preliminary reading of the US first-quarter GDP due later on Thursday.
Injective price weakness persists despite over 5.9 million INJ tokens burned
Injective price is trading with a bearish bias, stuck in the lower section of the market range. The bearish outlook abounds despite the network's deflationary efforts to pump the price.
US Q1 GDP Preview: Economic growth set to remain firm in, albeit easing from Q4
The United States Gross Domestic Product (GDP) is seen expanding at an annualized rate of 2.5% in Q1. The current resilience of the US economy bolsters the case for a soft landing.