NZD/USD tumbles to near 0.6430 as DXY turns volatile, focus is on Fed and NZ employment
03.05.2022, 05:58

NZD/USD tumbles to near 0.6430 as DXY turns volatile, focus is on Fed and NZ employment

  • NZD/USD has surrendered its entire intraday gains and looks to continue its eight-day losing streak.
  • The DXY has turned extremely volatile ahead of the Fed’s monetary policy.
  • NZ Jobless Rate and Employment Change are seen at 3.2% and 0.1% respectively.

The NZD/USD pair is displaying wild moves in the Asian session as the US dollar index (DXY) has turned erratic ahead of the monetary policy announcement by the Federal Reserve (Fed). The mega event of interest rate decision announcement has turned the Fx domain volatile.

This monetary policy carries significant importance which is why it is responsible for some erratic moves in the DXY. After the Covid-19 pandemic, the infusion of helicopter money and ultra-loose monetary policy in the economy was driving the risk-perceived currencies. As inflation has climbed to the rooftop, major central banks are tightening their policy stance to combat the soaring inflation. Considering the market consensus, the Fed is expected to elevate its rates by 50 basis points (bps). Also, this will mark an end to the era of liquidity expansion, which will be followed by a prolonged period of a liquidity squeeze. The DXY has started scaling higher and has climbed to near 103.60.

Apart from the Fed’s policy on Wednesday, the employment data in the kiwi area will remain on the radar. Statistics New Zealand is expected to report the Unemployment Rate at 3.2%, similar to the earlier print. While the Employment Change is seen at 0.1%. A higher-than-expected employment data will bolster the odds of one more rate hike by the Reserve Bank of New Zealand (RBNZ).

 

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