- NZD/USD bulls back in charge as price moves back towards session highs.
- GDP disappointment has been looked through as Fed takes priority.
The New Zealand dollar has denied the bears of a move down to prior resistance and has been supported instead in a shallower correction on the session.
At the time of writing, NZD/USD is trading at 0.7243 and is virtually flat on the day having travelled between a low of 0.7225 and 0.7259 the high.
The main focus was on the Federal Reserve overnight, but NZ Gross Domestic Product interrupted the markets momentarily.
Concerningly, there was a solid decline in activity in the fourth quarter which points to prospects of another recession when taking into consideration the current quarter and high probability of a contraction.
”Electronic card transactions fell in January and February. And the week-long lockdown in Auckland in March means a decline in consumption is all but confirmed. Similarly, the New Zealand activity index eased in both January and February,” analysts at Capital Economics argued.
Meanwhile, the US dollar was trashed overnight in the New York session following the Fed.
The “Dot Plot” continued to show no rate increases through 2023 which caught the market off guard.
There were only 2 more members to a total of just seven that are expecting hikes in 2023.
”In his press conference, Chair Powell stressed that they need to see actual inflation (rather than inflation forecasts) rising sustainably before contemplating a shift in stance, and that was likely to be some way off,” analysts at Westpac noted, further weighing on the greenback and US rates.
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