NZD/USD Falls To Around 0.6150, Breaking Its Winning Streak

NZD/USD halted a three-day winning streak and traded around 0.6170 in early European trading on Thursday. Its decline could be due to the dollar’s strength following the hawkish tone from the U.S. Federal Reserve (Fed) on Wednesday. Investors await Thursday’s release of weekly U.S. jobless claims and producer price index (PPI) for further insight into the state of the U.S. economy.

The Federal Open Market Committee (FOMC) kept its benchmark lending rate in a range of 5.25%-5.50% for the seventh consecutive time at its June meeting on Wednesday, as widely expected. Fed Chairman Jerome Powell said in a press conference following the Fed’s decision that the restrictive stance of monetary policy is having the desired impact on inflation. “So far this year, we have not had greater confidence in inflation to justify a rate cut,” Powell added.

The U.S. Dollar Index (DXY), which measures the value of the U.S. dollar (USD) against six major currencies, rose to around 104.80, likely supported by a rebound in U.S. Treasury yields. At press time, 2-year and 10-year Treasury yields were 4.76% and 4.32%, respectively.

In New Zealand, electronic card retail sales fell 1.1% month-on-month in May, a steeper decline compared to the 0.4% drop in April. On an annual basis, however, the decline was 1.6%, significantly less than the 3.8% drop in the previous year.

The Reserve Bank of New Zealand (RBNZ) said it has no plans to cut interest rates in 2024 and is unlikely to do so before mid-2025. Despite the economic challenges, policymakers warned that there are still upside risks to inflation. According to Reuters, pricing in bond futures markets shows that the New Zealand central bank could ease policy as early as October this year, with a probability of about 44%.

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