By Areena Fx- The New Zealand Dollar edges up, favoured by a mild USD correction with investors bracing for the Fed decision.
- The Fed is widely expected to keep rates on hold at the 4.25%-4.50% range.
- Somewhat earlier, a significant rebound of the US Q2 GDP might provide support for a hawkish Fed stance.
The New Zealand Dollar is showing a mild recovery attempt against its US counterpart, trimming losses after a four-day losing st¡treak, as investors brace for the US Federal Reserve’s monetary policy decision due later today.
The Kiwi picked up from 0.5945 lows but remains trapped within Tuesday’s range so far, with upside attempts capped at 0.5970. From a wider perspective, the pair has been moving back and forth within the last two months’ range, roughly between 0.5900 and 0.6100.
US Dollar is seen a slight profit-taking ahead of the Fed decision. The bank is widely expected to leave rates at the current 4.25%-4.50% range, but investors will be eager to know more about September’s decision.
Futures markets are pricing a 65% chance of a rate cut after the summer, but recent data confirmed that the US economy remains resilient, which gives more leeway for the bank to keep its cautious stance until the economic impact of tariffs is evidenced. The risk is high for a hawkish message that might give an additional boost to the USDollar.
Somewhat earlier, the preliminary US GDP is expected to show that the US economy grew at a 2.4% in the second quarter after a 0.5% contraction in the first one, providing further support to the Fed to keep interest rates higher for a longer time.