NZD extends gains ahead of GDP, FOMC meeting

The New Zealand dollar has extended its gains for a second straight day. NZD/USD is trading just above the 0.68 line in the North American session.

All eyes on Federal Reserve

The Federal Reserve is poised to raise rates by 0.25% at today’s meeting. The Fed has telegraphed its intentions to the markets so the move has been priced in. Still, this is a significant move as it is the Fed’s first rate hike since 2018. We could see some movement from the US dollar, depending on the hawkishness of the rate statement, dot plot and Jerome Powell’s press conference. Today’s lift-off is just the start of a rate-tightening cycle, but it remains unclear just how fast a pace the Fed will take towards normalization. There has been a large discrepancy between the Fed projection of rate hikes and what the markets are expecting. The FOMC dot plot is likely to project four hikes in 2022, which is considerably more dovish than the markets, which have priced in seven hikes this year.

The war in Ukraine has injected plenty of volatility into the financial markets. We’ve seen risk apprehension subside when there has been talk of a ceasefire, only to rise back up when the fighting continued. Today’s reports are more encouraging, with the warring sides apparently working on a detailed plan to end the fighting, which would include Ukraine declaring neutrality.

New Zealand releases GDP for Q1 later today, with a gain of 3.2% YoY expected. This follows a dismal third quarter, which saw the economy, which was hampered by Covid restrictions contract by 3.2%. A strong gain could extend the New Zealand dollar’s current upswing.

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NZD/USD Technical

  • NZD/USD has support at 0.6763 and 6716
  • There is resistance at 0.6893 and 0.6974

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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