- NZD/USD meets with a fresh supply on Thursday and is pressured by a combination of factors.
- Fed rate hike bets trigger a fresh leg up in the US bond yields and revive the USD demand.
- The risk-off impulse also underpins the safe-haven buck and weighs on the risk-sensitive kiwi.
The NZD/USD pair comes under renewed selling pressure on Thursday and reverses a part of the overnight bounce from its lowest level since March 2020. The pair maintains its offered tone through the early part of the European session and is currently trading near the daily low, just above mid-0.5600s.
Following the previous day's dramatic turnaround from a new 20-year peak, the US dollar regains strong positive traction and turns out to be a key factor exerting downward pressure on the NZD/USD pair. A goodish pickup in the US Treasury bond yields, bolstered by expectations for faster rate hikes by the Fed, acts as a tailwind for the greenback.
Investors seem convinced that the Fed will stick to its aggressive policy tightening path to combat stubbornly high inflation. The bets were reaffirmed by the recent hawkish comments by a slew of FOMC members. This, along with a fresh wave of the global risk-aversion trade, underpins the safe-haven buck and weighs on the risk-sensitive kiwi.
The market sentiment remains fragile amid growing worries that rapidly rising borrowing costs will lead to a deeper global economic downturn. Apart from this, the risk of a further escalation in the Russia-Ukraine conflict takes its toll on the global risk sentiment, which is evident from a sea of red across the global equity markets.
Market participants now look forward to the US economic docket, featuring the release of the final Q2 GDP report and the usual Weekly Initial Jobless Claims data. This, along with speeches by influential FOMC members and the US bond yields, will drive the USD demand and produce some trading opportunities around the NZD/USD pair.
Technical levels to watch
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. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD stays near 1.0400 in thin holiday trading
EUR/USD trades with mild losses near 1.0400 on Tuesday. The expectation that the US Federal Reserve will deliver fewer rate cuts in 2025 provides some support for the US Dollar. Trading volumes are likely to remain low heading into the Christmas break.
GBP/USD struggles to find direction, holds steady near 1.2550
GBP/USD consolidates in a range at around 1.2550 on Tuesday after closing in negative territory on Monday. The US Dollar preserves its strength and makes it difficult for the pair to gain traction as trading conditions thin out on Christmas Eve.
Gold holds above $2,600, bulls non-committed on hawkish Fed outlook
Gold trades in a narrow channel above $2,600 on Tuesday, albeit lacking strong follow-through buying. Geopolitical tensions and trade war fears lend support to the safe-haven XAU/USD, while the Fed’s hawkish shift acts as a tailwind for the USD and caps the precious metal.
IRS says crypto staking should be taxed in response to lawsuit
In a filing on Monday, the US International Revenue Service stated that the rewards gotten from staking cryptocurrencies should be taxed, responding to a lawsuit from couple Joshua and Jessica Jarrett.
2025 outlook: What is next for developed economies and currencies?
As the door closes in 2024, and while the year feels like it has passed in the blink of an eye, a lot has happened. If I had to summarise it all in four words, it would be: ‘a year of surprises’.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.