New Zealand dollar on hold ahead of Powell

The New Zealand dollar is almost unchanged on Tuesday. In the North American session, NZD/USD is trading at 0.6984, down 0.04% on the day.

NZ dollar steadies after Powell’s dovish message

The New Zealand dollar is taking a breather after close to a week of volatility. The currency plunged 2.65% last week and fell below the symbolic 70-level for the first time since April. The US dollar soared after last week’s FOMC meeting, as policymakers brought up the timeline for interest rate hikes, signalling that there could be two rate hikes in 2023.

Fed Chair Powell can state with confidence that he hasn’t veered from his dovish stance. After the FOMC meeting, Powell urged the markets to take the new timeline with a grain of salt, but his message fell on deaf ears, as the dollar soared and equities sank.

In prepared remarks which Powell will read to Congress later in the day, the Fed Chair has reiterated that inflation is transitory. Some investors might be scratching their head hearing this, given that US inflation has hit a 13-year high. Still, there’s no point arguing with the market, and dovish comments from Fed member John Williams have only reinforced the market’s perception of the Fed remaining dovish.

In New Zealand, the RBNZ quietly is continuing to scale back its weekly QE purchases. The central bank had been paying NZ 350 million dollars but has trimmed this to NZD220 million and this is expected to fall to NZD200 million next week. This move comes after the RBNZ was widely off the mark on first-quarter GDP, which came in at 1.6%. The bank had expected a gain of just 0.6%. The ANZ, the largest bank in the country, has projected that the bank will raise interest rates as soon as February 2022.

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NZD/USD Technical

  • There is resistance at 0.7086, followed by 0.7243
  • On the downside, the pair has support at 0.6848 and 0.6767

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Kenny Fisher

Kenny Fisher

Market Analyst at OANDA
A highly experienced financial market analyst with a focus on fundamental analysis, Kenneth Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities. His work has been published in several major online financial publications including Investing.com, Seeking Alpha and FXStreet. Based in Israel, Kenny has been a MarketPulse contributor since 2012.
Kenny Fisher

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