NZ dollar steady ahead of GDP, FOMC

The New Zealand dollar has posted slight losses in the Wednesday session. Currently, NZD/USD is trading at 0.7176, down 0.12% on the day. The tranquil movement of the currency could be shaken up later in the day, with the releases of the FOMC meeting (16:00 GMT) and New Zealand GDP (21:45 GMT).

New Zealand GDP expected to be muted

After the rollercoaster in recent GDP reports, we can expect a return to stability in the Q4 release. The economic downturn and subsequent recovery were reflected in GDP in Q2 and Q3, with readings of -12.2% and +14.0%, respectively. With New Zealand in the enviable position of having Covid-19 under control, the economy is expected to post a small gain of 0.2% for the fourth quarter. The New Zealand dollar is unlikely to show a significant reaction to GDP unless the reading misses expectations.

All eyes on FOMC meeting

The currency markets are in a holding pattern ahead of tonight’s FOMC policy meeting. The policy announcement is the most important event risk of the week. FOMC members are meeting for the first time since inflation expectations have risen, sending US yields sharply higher. Fed Chair Powell hasn’t expressed any worries about higher US yields, but will he convey the same message tonight? If Powell states that he has concerns about higher yields, as we saw with the ECB, then yields could sink and drag the US dollar lower. Powell is expected to reiterate that the Fed continues to have a dovish stance, but at the same time growth and inflation forecasts are expected to revised upwards. It will be interesting to see how the market reacts to the FOMC, and the meeting could well be a market-mover for the US dollar.

.

NZD/USD Technical

• There is resistance at 0.7244, followed by resistance at 0.7311
• The first level of support is 0.7106, which is protecting the round number of 0.7100. Below, we have support at 0.7035

Content 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 Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at info@marketpulse.com. Visit https://www.marketpulse.com/ to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.