NZD/USD Flattens Around 0.5650 As Investors Await Fed Powell’s Testimony
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- NZD/USD trades sideways around 0.5650 ahead of Fed Chair Powell’s testimony.
- Fed Powell is unlikely to provide a timeline for the central bank's resume of its policy-easing cycle.
- The RBNZ is expected to continue reducing interest rates due to the weak labor market.
The NZD/USD pair trades flat around 0.5650 in the North American session on Tuesday. The Kiwi pair exhibits indecisiveness, with investors focusing on the Federal Reserve (Fed) Chair Jerome Powell’s testimony at the Capitol Hill at 15:00 GMT.
Ahead of Fed Powell’s testimony, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades subduedly around 108.30.
Investors await Fed Powell’s speech to get cues about the monetary policy outlook. The Fed left its interest rates in the range of 4.25%-4.50% in the January policy meeting, and Powell guided that monetary policy adjustments would be appropriate only when officials would see “real progress in inflation and at least some weakness in the labor market.
Market participants would also like to know the impact of 25% tariffs on imports of steel and aluminum, imposed by United States (US) President Donald Trump on Monday, on the inflation outlook. Market experts believe that Trump’s international agenda will be inflationary for the economy.
This week, the New Zealand Dollar (NZD) will be guided by market expectations for the Reserve Bank of New Zealand’s (RBNZ) interest rate decision on February 19 due to the light economic calendar. The RBNZ has already reduced its Official Cash Rate (OCR) by 125 basis points (bps) to 4.25% and investors expect the central bank to continue easing the monetary policy further due to weakness in the job market.
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