The NZD/USD pair is showing signs of gaining momentum around 0.6145 after the release of New Zealand’s GDP data on Thursday. The country’s economy grew by 0.2% on a quarter-on-quarter basis in the first quarter of the year, surpassing expectations. This positive data has led to an increase in demand for the New Zealand Dollar (NZD) and a decline in the US Dollar (USD). The US Retail Sales data released last week pointed towards a slowdown in the US economy and has raised expectations of a rate cut by the Federal Reserve.
Investors are now looking forward to key economic data releases from the US, including weekly Initial Jobless Claims, Building Permits, Housing Starts, and the Philly Fed Manufacturing Index, as well as a speech by the Fed’s Barkin for further market direction. The positive GDP growth in New Zealand has indicated an exit from recession for the country, attracting buyers to the NZD. However, Westpac New Zealand’s Consumer Confidence Survey reported a decline in consumer sentiment for the second quarter, which may weigh on the currency in the near term.
The recent weaker US Retail Sales report has increased the likelihood of a Fed rate cut in the coming months. Market participants are now pricing in a nearly 67% chance of a 25 basis points rate cut by the Fed in September, up from 61% just a day ago. Boston Fed President Susan Collins has also hinted at the possibility of one or two interest rate cuts later this year, but emphasized the need for patience given the volatile inflation data. This has led to some selling pressure on the USD, supporting the gains in the NZD/USD pair.
Overall, the NZD/USD pair is currently benefiting from the positive GDP data from New Zealand and the prospects of a Fed rate cut in the US. Investors are closely monitoring upcoming economic data releases and central bank speeches for further cues. The market sentiment remains cautious amid uncertainties surrounding global economic recovery and the ongoing impact of the COVID-19 pandemic. Traders should remain vigilant and stay informed about the latest developments to make well-informed trading decisions in the forex market.
