- A combination of factors dragged NZD/USD to a new yearly low on Thursday.
- Growing expectations for a rate cut by the RBNZ in July weigh on the New Zealand Dollar amid a softer risk tone.
- Sustained buying around the USD puts additional pressure and contributes to the pair's current decline.
The pair NZD/USD is under strong selling pressure on Thursday and continues to lose ground during the first half of the European session. The bearish trajectory drags the pair to the 0.5960-0.5955 zone, the lowest level since November 17and it is due to a combination of factors.
New Zealand Dollar (NZD) weakens after ANZ Bank business outlook survey showed a weakening of activity indicators and a slight drop in inflationary pressures. Furthermore, the markets value almost 50% chance that the Reserve Bank of New Zealand (RBNZ) will cut rates as early as July. This, along with a fresh wave of buying around the US Dollar (USD), prove to be key factors putting downward pressure on the NZD/USD pair.
The US Dollar Index (DXY), which measures the performance of the Dollar against a basket of currencies, hit a more than one-month high following hawkish comments from the Governor of the Federal Reserve (Fed), Christopher Waller, on Wednesday, who tempered expectations for a US central bank rate cut. This remains supportive of elevated US Treasury yields, which, along with a softer risk tone, is seen benefiting the safe-haven US Dollar and shifting monetary flows away from the sensitive New Zealand Dollar. to risk.
With the latest downward movementthe NZD/USD pair seems to have confirmed the breakout of the weekly range and the psychological level of 0.6000. This, in turn, favors the bears and supports the prospects of a new depreciation move in the short term. Market participants now look to the US economic agenda – with the final fourth quarter GDP figure, initial weekly jobless claims, pending home sales and the Michigan Consumer Sentiment Index revised .
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
