Nzdusd Jumps Amid Risk On

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Nzdusd Jumps Amid Risk On

Nzd/Usd Jumps To 0.6200 Amid Risk On

Risk on mood has helped the NZD/USD to jump towards 0.6200 on Wednesday. It seems that the risk-on mode has helped the currencies like NZD as many are shying away from buying the US Dollar ahead of the FOMC's meeting.

The US Dollar is on the back foot against its FX peers as the US central bank is expected to deliver a bigger rate cut. Additionally, the CME FedWatch tool is also showing a higher possibility of a deeper rate cut as compared to 25 bps.

Dxy Trades Near 100.82

Amidst all of this, the US bond yields are also putting pressure on the greenback. The DXY, which measures the value of USD, is especially hovering near 100.82. Similarly, the 2-year bond yield is around 3.60%, while the 10-Y bond yield is hovering at 3.64%.

According to UOB Group, the chance of any further gains in the NZD are unlikely in the short-term. In fact, they added that the trading range of NZD will be 0.6160 - 0.6205. And if we look at the long-term trading range, it is between 0.6135 to 0.6235.

Current account deficit data for New Zealand was also released today, which showed a reading of 4.826 billion (NZD) during 2Q. This is an increase from the earlier reading of 3.825 billion (NZD) and shows not everything is great with the NZ economy.

Looking ahead, the traders will be closely looking at the upcoming Q2 GDP of New Zealand, which is due tomorrow. The forecast shows that GDP will contract during Q2 by 0.4% q/q, while Q1 showed 0.2% q/q growth.

Similarly, the GDP during Q2 is expected to show a reading of 0.5% on an annual basis, up from 0.3% in the previous quarter.

Once the US Federal Reserve's decision is made public later today, we can expect a higher degree of volatility in the NZD/USD & other USD pairs. Generally, a deeper rate cut will send the NZD/USD higher, while a lower rate cut will not have much of an effect.

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