NZD/USD moves sideways above the 0.6200 mark with a focus on US GDP
- NZD/USD remains flat near the 0.6200 area after the Fed's decision and statement.
- As expected, the Federal Reserve (Fed) raises rates by 25 basis points (bps) to 5.25%–5.5%.
- Investors will shift their focus to US Q2 GDP, weekly Jobless Claims and Durable Goods Orders.
The NZD/USD pair remains steady around the 0.6200 mark in the early Asian session after hitting multi-day highs at 0.6235 and pulling back. The US dollar Index (DXY), a measure of the value of the Greenback against six other major currencies, weakened across the board following the Fed's decision and statement. The DXY dropped to 100.85 and rebounded above the 101.00 area. The US 10-year Treasury yield traded at around 3.87%, and the 2-year at 4.85%.
As widely expected, the Federal Reserve (Fed) raised interest rates by 25 basis points (bps) to 5.25%–5.5% on Wednesday. The rate was last seen just before the housing market collapse in 2007, and marked the highest level in more than 22 years.
During a news conference, Fed Chairman Jerome Powell stated that inflation has moderated somewhat since the middle of last year but that the Fed's 2% target "has a long way to go." Even so, he left room for the Fed to keep rates unchanged at its September meeting. He added that the Fed will consider the incoming data for additional rate hikes if needed.
On the other hand, the Reserve Bank of New Zealand (RBNZ) maintained the official cash rate (OCR) unchanged at 5.50% in the July meeting, which triggered further downside on the Kiwi. However, the downside potential for the NZD/USD pair appears limited as the market expects a more hawkish stance from the RBNZ.
In the absence of economic data released from New Zealand, the USD's valuation is likely to continue to influence the pair's movement. Market participants will shift their focus to the US Advance GDP QoQ. Also, the weekly Jobless Claims and Durable Goods Orders are due later in the day.