NZD/USD drops to fresh below 0.5900 on hawkish Powell and risk-off markets
- Fed Powell warns about sticky inflation and sends the US Dollar higher.
- The frail market sentiment on concerns about the Middle East conflict is weighing on the risk-sensitive Kiwi.
- Investors' focus is now on the New Zealand CPI data, due later on Tuesday.
The risk-averse sentiment on concerns about an escalation of the Middle East conflict is hammering the Kiwi this week. The NZD/USD has depreciated about 3.6% in the last few trading days and is about to test the support area at 0.5860.
The US Dollar remains firm, fuelled by rising US bond yields, with investors reassessing their Fed easing calendar. On Tuesday, Fed Chair, Jerome Powell suggested that recent data shows a lack of progress on inflation, which endorses the “higher for longer” Fed outlook.
Earlier on Tuesday, the mixed Chinese data seen on Wednesday failed to provide a significant impulse to the China-proxy Kiwi. China’s GDP accelerated to a 5.3% yearly growth in the first quarter, above expectations of a 5% reading. These figures, however, have been offset by weak consumption and industrial production data.
The focus is now on New Zealand’s Consumer Prices Index report, due later on Tuesday. Price pressures are expected to have ticked up in March, which would support the Kiwi. A negative surprise could accelerate the pair’s downtrend.
Reprinted from FXStreet,the copyright all reserved by the original author.
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