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NZD/USD loses ground near 0.6100 ahead of the key US event.
The new coalition government of New Zealand passed legislation to abandon the RBNZ dual mandate and focus solely on price stability.
The Federal Reserve (Fed) is widely expected to hold interest rates steady at 5.25%–5.50% at its last meeting of the year.
Investors will closely monitor the Federal Reserve’s (Fed) monetary policy meeting ahead of New Zealand’s GDP growth for Q3.
The NZD/USD pair faces some selling pressure during the early European session on Wednesday. The pair hit intraday lows at 0.6093 after retracing from the high of 0.6139. The pair currently trades near 0.6097, down 0.54% on the day.
Early Wednesday, the new coalition government of New Zealand passed legislation to abandon the Reserve Bank of New Zealand’s (RBNZ) dual mandate and focus solely on price stability. Additionally, Finance Minister Nicola Willis amended the remit for the RBNZ’s Monetary Policy Committee (MPC), removing the objective to support maximum sustainable employment while keeping the inflation target at 1-3%.
Apart from this, New Zealand’s annual Current Account deficit arrived at 7.6% of GDP in the third quarter (Q3) ended in September from 7.5% in the previous reading. Investors await the Gross Domestic Product (GDP) for the third quarter. If the report comes in worse than expected, this could weigh on the New Zealand Dollar and act as a headwind for the NZD/USD pair.
On the USD’s front, the Federal Reserve (Fed) is widely expected to hold interest rates steady at its last meeting of the year on Wednesday. The markets anticipate that Fed Chair Jerome Powell will maintain a hawkish tone and push back against the bet for rate cutting. Last week, Fed Chair Powell said it would be premature to say that we have achieved a restrictive stance while adding that the central bank is prepared to tighten policy further if necessary.
US inflation, as measured by Consumer Price Index (CPI) rose by 0.1% MoM and 3.1% YoY in November, matching the market estimation, the US Bureau of Labor Statistics showed on Tuesday. Meanwhile, the Core CPI, which excludes volatile food and energy prices, grew by 0.3% MoM and 4.0% YoY, as expected.
Traders will closely watch the US Producer Price Index (PPI) on Wednesday ahead of the Federal Reserve’s (Fed) monetary policy meeting. On Wednesday, the New Zealand GDP growth numbers for Q3 will be released. The quarterly growth rate is estimated to expand 0.2% and the annual rate is forecast to grow 0.5%. Market players will take cues from these data and find trading opportunities around the NZD/USD pair.
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