New Zealand GDP Preview: The Auckland Lockdown Threatens The Economic Turnaround

Upbeat GDP to save the day for NZD bulls? 

NZD/USD remains confined within Monday’s trading between 0.7217 and 0.7158 so far this week. Markets refrain from placing any directional bets in the lead-up to US Federal Reserve (Fed) monetary policy decision and the NZ Q4 GDP release, both due on the cards this Wednesday.

The FOMC outcome-induced risk sentiment will likely emerge as the key catalyst behind the kiwi’s price action. Therefore, the NZ dollar could show a limited reaction to the GDP report.

The Fed is widely expected to maintain its monetary policy settings but the economic projections and dot plot chart will be closely eyed. Investors wait to see if Fed Chair Jerome Powell signals a faster path toward policy normalization than previously expected, in the face of rising inflation risks.

Only a big beat on the NZ GDP figures could put a floor under NZD/USD, which could power the kiwi bulls towards March highs just above the 0.7300 level. A dovish Fed along with a downbeat GDP reading could help the spot to extend its decline towards 0.7100.

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