- NZD/USD has climbed strongly to 0.6200 as the USD Index has fallen like a house of cards.
- Softer US PPI has strengthened the demand for US bonds, which has brought down 10-year US Treasury Yields to 3.78%.
- The New Zealand economy is expected to show a mild contraction by 0.1% in the first quarter.
The NZD/USD pair has demonstrated a solid rally to the round-level resistance of 0.6200 as the US Dollar Index (DXY) has fallen like a house of cards. The Kiwi asset has been strengthened as May’s United States Producer Price Index (PPI) has cooled down due to lower gasoline prices.
S&P500 futures have surrendered the majority of gains added in Europe as investors are looking forward to the interest rate decision and the release of the dot plot by the Federal Reserve (Fed). US equities are losing their charm for the time being, however, its broader appeal is still solid as investors are extremely confident that a neutral stance will be taken by Fed chair Jerome Powell.
Analysts at Commerzbank cited Fed’s Powell may try his best to make a July hike seem likely. But I hope that the currency market is not so stupid as to overlook the obvious contradiction between words and deeds that this would create.
The USD Index has extended its downside journey to near 102.90 as firms have passed on the comfort of lower gasoline prices to end consumers by reducing prices of goods and services at factory gates. Monthly headline PPI has contracted by 0.3% in May while the street was anticipated a 0.1% contraction while core PPI has maintained its pace at 0.2% as expected by the market participants in the same period.
Softer US PPI has strengthened the demand for US government bonds, which has brought down 10-year US Treasury Yields to 3.78%.
Meanwhile, the New Zealand Dollar is going to heavily react to the Q1 Gross Domestic Product (GDP) data, which will be announced on Thursday. According to the preliminary report, Quarterly GDP is seen contracting by 0.1% against a prior contraction of 0.6%. On an annualized basis, the economic data is expected to expand by 2.6%, higher than the prior contraction of 2.2%.
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
Gold rallies to new record-high above $3,030
Gold benefits from escalating geopolitical tensions and extends its rally to a new record-high above $3,030 in the American session on Tuesday. Israel resumed military operations against Hamas in Gaza after the group rejected US proposals for extending ceasefire. All eyes now remain on the Trump-Putin call.
EUR/USD retreats from fresh 2025 highs, flirts with 1.0900
EUR/USD retreats from the multi-month high set above 1.0950 earlier in the day and tests 1.0900. The risk-averse market atmosphere helps the US Dollar (USD) holds its ground and makes it difficult for the pair to preserve its bullish momentum.
GBP/USD turns south after testing 1.3000
After reaching its highest level since early November above 1.3000, GBP/USD loses its traction and declines toward 1.2950 on Tuesday. The US Dollar makes a strong comeback and weighs on the pair, helped by upbeat local data and the souring risk mood ahead of this week's key central bank meetings.
Trump-Putin talks raise hopes of a ceasefire – Middle East risk returns
The prospective end to the Russia-Ukraine war has traders excited for a more positive growth outlook in Europe going forward, with heavily industrialised nations such as Germany having suffered under the weight of elevated energy costs in recent years.
Tariff wars are stories that usually end badly
In a 1933 article on national self-sufficiency1, British economist John Maynard Keynes advised “those who seek to disembarrass a country from its entanglements” to be “very slow and wary” and illustrated his point with the following image: “It should not be a matter of tearing up roots but of slowly training a plant to grow in a different direction”.
The Best brokers to trade EUR/USD
SPONSORED Discover the top brokers for trading EUR/USD in 2025. Our list features brokers with competitive spreads, fast execution, and powerful platforms. Whether you're a beginner or an expert, find the right partner to navigate the dynamic Forex market.