The NZD/USD pair faced selling pressure on Friday as the USD demand increased, leading to a drop in spot prices to their lowest level since mid-May. The USD strengthened to a two-month high due to the Fed’s hawkish outlook and rising US bond yields. Market focus was on the release of the US PCE Price Index.
The New Zealand Dollar was weighed down by expectations of earlier rate cuts by the Reserve Bank of New Zealand, overshadowing positive sentiment in equity markets. This lack of support for the Kiwi contributed to the downward pressure on the NZD/USD pair. Traders awaited the US PCE Price Index for insights into the Fed’s future policy decisions.
The data released could influence the USD price dynamics in the short term and determine the next direction for the NZD/USD pair. Despite this, spot prices were set to record significant weekly losses and continue a downward trend.
The US Dollar is the official currency of the United States and a dominant currency in global foreign exchange markets. The value of the USD is primarily affected by the Federal Reserve’s monetary policy decisions, which aim to control inflation and support employment. The Fed’s tools include adjusting interest rates and implementing measures like quantitative easing. These policies can impact the strength of the USD in international markets.