The Reserve Bank of New Zealand kept its policy rate constant and opted to suspend further asset purchases.
Following a loss on Wednesday, the US Dollar Index has recovered to 92.50.
The focus moves to US statistics and the testimony of FOMC Chairman Powell.
The NZD/USD pair crept higher during the Asian session on Thursday after gaining about 100 pips on Wednesday, but it failed to maintain its bullish momentum. At the time of writing, the pair was trading at 0.7005, down 0.38 percent on the day.
The Reserve Bank of New Zealand kept its policy rate at 0.25 percent after its July policy meeting, as expected. The bank, on the other hand, has opted to lower the existing degree of stimulus in its policy settings. “By 23 July 2021, the Reserve Bank will cease further asset purchases under the Large Scale Asset Purchase (LSAP) programme,” the RBNZ said in a statement. Nonetheless, the NZD’s favorable impact from this hawkish policy move was short-lived.
As the RBNZ moves into the hawkish camp, the NZD/USD is expected to rise well around 0.73 – Rabobank.
On the other side, the US Dollar Index (DXY), which fell substantially after FOMC Chairman Jerome Powell’s dovish remarks during the Fed’s semiannual Monetary Policy Report, is making a comeback on Thursday. The DXY is currently up 0.12 on the day at 92.47, keeping the NZD/USD in negative territory.
The US economic docket will include data on the NY Empire State Manufacturing Index, Initial Jobless Claims, and Industrial Production later in the session. In addition, FOMC Chairman Powell will testify in front of Congress on the second day of his testimony.
On Friday, New Zealand’s second-quarter Consumer Price Index (CPI) figures will be scrutinized for new impetus./n
