- NZD/USD fell to a near two-year low, although it is paring some of its earlier losses.
- The Fed is expected to raise rates to the 4.4% threshold, according to the FOMC Summary of Economic Projections.
- On Friday, the release of US global PMIs and a speech by Fed Chairman Jerome Powell are expected.
On Thursday, the New Zealand dollar fell to a two-year low amid growing fears that a frenzy by central banks to tighten monetary conditions will push the global economy into recession. At the time of writing, the NZD/USD is trading at 0.5845, down 0.11% from its opening price.
The US Federal Reserve decided to raise rates by 75 basis points on Wednesday, underlining that it is likely to maintain its tightening cycle. The Summary of Economic Projections (SEP) showed that FOMC members expect the Federal Funds Rate (FFR) to end around 4.4%.
NZD/USD trims previous losses but remains on the defensive
During the press conference, Jerome Powell said, “We have to put inflation behind us,” adding, “I wish there was a painless way to do it. The SEP updated projections for GDP, PCE, core PCE, and unemployment. The Most members expect GDP to come in at 0.2%, while the PCE and core PCE have been revised up to 5.4% and 4.5% by the end of the year As for the unemployment rate, policy makers they revised the figure to 3.8%.
Before the open on Wall Street, the Labor Department showed that US jobless claims for the latest week ending September 17 rose by 213,000, less than the 217,000 estimate but above the previous reading, revised lower to 208,000.
Meanwhile, US Treasury yields rose, led by the 10-year Treasury yield, which rose 14 basis points to 3,714%, while the dollar fell, as the DXY.
Meanwhile, the New Zealand Economic Calendar reported that Consumer Confidence for the third quarter improved from 78.7 to 87.6 in the previous quarter. Over the past week, ANZ Bank economists forecast three additional 25 basis point rate hikes by the RBZN at the February, April and May policy meetings. Therefore, the bank estimates that the Overnight Cash Rate (OCR) will end up around 4.75%.
“The economy is not riding high, as tight labor markets and strong wage growth partially offset the impact of rising interest rates. The low New Zealand dollar is also a significant offset to current monetary conditions.” “ANZ Bank analysts note.
What must be considered
The New Zealand economic docket is empty, leaving traders adrift on US economic data.
Key NZD/USD Technical Levels
|last price today||0.5847|
|daily change today||-0.0005|
|Today’s daily variation in %||-0.09|
|Daily opening today||0.5852|
|Previous daily high||0.5913|
|Previous Daily Low||0.5842|
|Previous Weekly High||0.6162|
|Previous Weekly Low||0.594|
|Previous Monthly High||0.647|
|Previous Monthly Low||0.6101|
|Daily Fibonacci of 38.2%||0.5869|
|Daily Fibonacci of 61.8%||0.5886|
|Daily Pivot Point S1||0.5825|
|Daily Pivot Point S2||0.5798|
|Daily Pivot Point S3||0.5755|
|Daily Pivot Point R1||0.5896|
|Daily Pivot Point R2||0.5939|
|Daily Pivot Point R3||0.5966|
Source: Fx Street