New Zealand Dollar gains ground as GDP growth beats expectations
NZD/USD rebounds on Thursday, trading around 0.5730 at the time of writing, up 0.35% on the day. The New Zealand Dollar (NZD) benefits from stronger-than-expected domestic growth data, allowing the pair to recover from the two-month low reached on Wednesday.
On Thursday, the New Zealand Dollar (NZD) made a rebound, trading around 0.5730, up 0.35% for the day. This gain came after Statistics New Zealand reported that the country's Gross Domestic Product (GDP) grew by 0.2% quarter-over-quarter in the second quarter, surpassing expectations of 0.1% growth. Despite the stronger figures, the pair struggled to maintain its recovery as the US Dollar (USD) remained supported by the Federal Reserve's (Fed) hawkish monetary policy outlook.
The Fed had raised its benchmark interest rate by 25 basis points, targeting a range of 3.75%-4%, marking the first increase since 2023. Fed Chair Kevin Warsh explained that high inflation had persisted for too long, hinting at further rate hikes. Markets currently have an 87% chance of at least one more interest rate increase in 2023, which could limit NZD/USD's upside potential due to wider yield differentials.
Geopolitical tensions in the Middle East added support for the safe-haven US Dollar, further dampening demand for risk-sensitive currencies like the New Zealand Dollar.
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