The NZD/USD pair gained significant traction near 0.6280 during the early Asian session on Thursday, reaching its highest level since January 4. This rise in the New Zealand Dollar (NZD) is fueled by expectations of a potential rate cut by the Federal Reserve (Fed) and robust results from the New Zealand ANZ Business Outlook Survey.
New Zealand’s business confidence surged to its highest point in a decade, with the ANZ Business Outlook Survey for August showing the headline confidence measure rising to 51.0. The survey’s expected own activity measure also jumped to a seven-year high of 37.0. ANZ Chief Economist Sharon Zollner described the survey results as indicative of a “flurry of optimism,” which has bolstered the Kiwi against the US Dollar (USD).
Last week, Fed Chair Jerome Powell indicated that the US central bank is prepared to cut interest rates. Concurrently, Minneapolis Fed President Neel Kashkari suggested that discussions on potentially reducing rates could begin as early as September due to signs of a weakening labor market. These dovish comments from Fed officials, including similar statements from St. Louis Fed President Alberto Musalem and Atlanta Fed President Raphael Bostic, are expected to weigh on the Greenback in the near term.
On Thursday, attention will shift to the second estimate of US Q2 GDP growth, with projections suggesting a 2.8% increase. A stronger-than-expected GDP outcome could strengthen the USD and limit further gains for the NZD/USD pair.
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