- NZD/USD faces a challenge due to the stronger US Dollar.
- Fed Chair Powell mentioned that there is no plan for an immediate rate hike.
- Upbeat US Treasury yields contribute support for the Greenback.
NZD/USD continues to move on the downward trajectory that began on October 17, trading lower around 0.5820 during the European session on Monday. The pair faces challenge as the US Dollar rebounds, driven by higher US Treasury yields. Additionally, increased risk aversion, stemming from the Israel-Hamas military situation, weighing on the NZD/USD pair.
The mixed remarks from US Federal Reserve (Fed) officials regarding the interest rates trajectory could limit the losses of the NZD/USD pair. Atlanta Fed President Raphael Bostic suggested that the Federal Reserve is unlikely to lower interest rates before the middle of next year, and Fed Philadelphia President Patrick Harker expressed a preference for maintaining unchanged interest rates.
Furthermore, Federal Reserve (Fed) Chairman Jerome Powell clarified in the previous week that the central bank is not planning an immediate rate hike, emphasizing the potential for further tightening of monetary policy in response to signs of growth.
The US Dollar Index (DXY) trims intraday gains, trading lower around 106.10 at the time of writing. However, the Greenback received upward support due to the positive momentum in US Treasury yields, with the 10-year US Treasury yield standing at 4.97%, up by 1.22% by the press time.
On Friday, the New Zealand Trade Balance figures revealed a close resemblance to the previous month’s data. In September, the headline Trade Balance recorded a deficit of $2.329 billion, slightly surpassing August’s deficit of $2.273 billion.
In the previous week, the headline Consumer Price Index (CPI) for the third quarter showed an increase of 1.8%, below the expected 2.0%. The yearly rate decelerated from 6.0% to 5.6%, falling short of consensus estimates of 5.9%. This data has prompted investors to adjust their expectations for a November interest rate hike by the Reserve Bank of New Zealand (RBNZ), leading to downward pressure on the NZD/USD pair.
China Plans Twice-a-Decade Financial Policy Conference Next Week. Meeting to discuss risk prevention including Local Government Financing Vehicles (LGFVs). China plans to convene a key financial policy gathering which takes place once every five years early next week to prevent risks and set medium-term priorities for the $61 trillion industry, according to people familiar with the matter.
Investors are likely to monitor the US S&P Global PMI on Tuesday and the Q3 Gross Domestic Product (GDP) on Thursday. On the Kiwi docket, Consumer Confidence will be eyed on Friday.
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