The Latest on NZD/USD Pair
Market Overview
- NZD/USD loses ground near 0.6340 in Tuesday’s early Asian session.
- Fed’s Powell said the central bank is not in a hurry to cut rates quickly, will be guided by data.
- The Chinese fresh stimulus measure might cap the downside for the Kiwi.
The NZD/USD pair is currently trading around 0.6340, marking a slight decline after a three-day winning streak in the early Asian session on Tuesday. The recent uptick in the US Dollar (USD) following US Federal Reserve (Fed) Chair Jerome Powell’s remarks is putting pressure on the pair. Investors are closely monitoring the US September ISM Manufacturing Purchasing Managers Index (PMI) scheduled for release today.
Fed’s Stance on Rate Cuts
During his speech on Monday, Fed Chair Powell hinted at potential rate cuts in the future, emphasizing that the decision would be data-driven. The Fed’s primary focus currently is to support a strong economy and job market, rather than responding to a recession or economic downturn.
The market is pricing in a 35.4% chance of a half-point rate cut in November, with a higher probability (64.6%) assigned to a quarter-point cut, according to the CME FedWatch Tool. All eyes are on the US labor market data release on Friday, with expectations of 140K job additions in September and an unchanged Unemployment Rate at 4.2%.
Impact of Chinese Stimulus on Kiwi
On the New Zealand Dollar (NZD) front, optimism surrounding China’s stimulus measures is likely to cushion the downside for the Kiwi. China’s central bank has announced plans to lower mortgage rates for existing home loans before October 31, aiming to support the country’s property market. Given that China is New Zealand’s largest export partner, this development is expected to benefit the NZD.
New Zealand Dollar FAQs
Factors Influencing NZD
The value of the New Zealand Dollar (NZD) is influenced by various factors:
- The health of the New Zealand economy
- Chinese economic performance
- Dairy prices
Role of RBNZ
The Reserve Bank of New Zealand (RBNZ) plays a crucial role in maintaining the value of NZD by managing inflation through interest rate adjustments.
Macroeconomic Data Impact
Economic indicators in New Zealand, such as GDP growth, unemployment rate, and inflation, significantly impact the valuation of the NZD.
Market Sentiment and NZD
The New Zealand Dollar tends to strengthen during periods of low market risk and optimism about growth, while it weakens in times of economic uncertainty.