NZD/USD gains traction and surpasses 0.6200 as Fed’s pivots to rate cuts
|- NZD/USD advances more than 1% as the Fed hints end of rate hikes.
- The Fed’s SEP confirmed rates in the US are at the highest level expected by policymakers.
- Fed officials project at least three rate cuts for 2024.
The NZD/USD surged more than 1% on Wednesday as the Federal Reserve shifted dovish, as Fed Chair Jerome Powell turned dovish as he answered a question that “we likely at or near peak for rates,” sponsoring another leg up on the Kiwi. At the time of writing, the NZD/USD trades volatile within the 0.6120/0.6200 area.
NZD/USD soars as the Fed turns dovish
As of writing, the Fed Chair Jerome Powell is crossing the wires, he has shifted dovish, adopting a more neutral stance. He said they could be at peak rates while adding it’s too far to declare victory on inflation. When asked of a possible recession, there is a possibility for the next year, but said “I have always felt there was a possibility economy could avert recession while inflation came down, and so far that's what we are seeing. That said, the result is not guaranteed.”
The US central bank stated there are some signals that monetary policy effects are being felt, as growth has eased and the jobs market has moderated. They said inflation data is better than expected, but it remains elevated.
Moving to the Summary of Economic Projections (SEP) officials expect rates to peak at 5.4%, while for 2024, they expect 80 basis points of rate cuts.
Regarding GDP, the central bank estimates the country will grow from 2.1% to 2.6%, and the Fed’s preferred gauge for inflation, the PCE to slump below 3%, while Core PCE is foreseen to edge lower from 3.7% to 3.2%
NZD/USD Hourly Chart – Reaction to Fed’s decision
NZD/USD Technical Levels
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.