The NZD/USD pair shows gains in a quiet North American session, with US traders observing Independence Day. However, the Reserve Bank of Australia’s (RBA) hawkish stance and the weakened greenback contribute to the NZD/USD’s upward movement. Currently, the NZD/USD is trading at 0.6197, rebounding from a daily low of 0.6140, marking a 0.75% increase.

NZD/USD Benefits from RBA’s Hawkish Position and Awaits US Data and RBNZ Decision

With US cash markets closed, global equities exhibit positive sentiment in a low-liquidity environment. Recent US economic data presents an uncertain outlook, as Durable Goods Orders, Retail Sales, and Q1’s final reading of Gross Domestic Product (GDP) justify the Federal Reserve’s (Fed) consideration of higher rates. However, a soft inflation reading on the Fed’s preferred gauge, released last Friday, and a contractionary ISM Manufacturing PMI for June, raise concerns of an impending recession.

Meanwhile, during the Asian session, the New Zealand Institute of Economic Research (NZIER) reported an improvement in the quarterly survey of business opinion (QSBO) for Q2, with a decline from -66.0 to -63.0%. The survey highlights weakening demand and decreasing capacity utilization among builders and manufacturers. Additionally, companies face challenges in finding labor, particularly unskilled workers.

These factors, combined with the RBA’s decision to maintain rates while leaning towards a hawkish stance in June, strengthen the New Zealand Dollar (NZD) against the US Dollar (USD).

The US Dollar Index (DXY), which measures the value of the dollar against a basket of currencies, has retraced some of Monday’s gains and now shows a 0.02% decrease at 102.941. In the short-term bond market, US Treasury yields are rising, while minor losses are seen in the 20-year and 30-year yields.

The New Zealand economic calendar remains relatively quiet this week, but attention will gradually shift towards the Reserve Bank of New Zealand’s (RBNZ) upcoming monetary policy decision, which is anticipated to maintain current interest rates. In the US, NZD/USD traders will focus on the latest Federal Open Market Committee (FOMC) minutes, speeches from Fed representatives, and labor market data for guidance.


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