NZD/USD climbs on risk appetite, speculations of Fed’s interest rate hike pause grow

• NZD/USD advances steadily with improved risk appetite and speculations of Fed's rate hike pause.
• Market participants mostly ignore Fed Chair Jerome Powell's hawkish remarks, expect rate cut by June 2024.
• Upcoming US Nonfarm Payrolls and inflationary data could reignite discussions on further tightening needs.

NZD/USD advances steadily on Thursday due to risk appetite improvement sponsored by speculations the US Federal Reserve (Fed) is done raising interest rates. Therefore, a drop in US Treasury bond yields weakened the American Dollar (USD), a tailwind for the pair. At the time of writing, the NZD/USD exchanges hands at 0.5883, gaining more than 0.60%.

NZD/USD gains more than 0.60%, trading at 0.5883 amidst weakening US Dollar

Even though the Fed held rates unchanged at the 5.25%-5.50% range, its Chair Jerome Powell delivered some hawkish remarks that market participants mostly ignored. Regarding that, interest rate futures traders expect the Fed’s first rate cut by June 2024, with odds at 6780, according to the CME FedWatch Tool.

That could be seen as premature, as additional data is pending to be released with tomorrow’s US Nonfarm Payrolls report for October. Data is expected to show the US economy added 180K jobs to the workforce and the Unemployment Rate to remain at 3.8%. That, along with Consumer Sentiment on November 10, inflationary data from the consumer and producer side on the November 13 week, could come hotter as expected, and reignite discussions that further tightening is needed.

In the meantime, Thursday’s economic docker featured Initial Jobless Claims, which rose above estimates and the prior week from October 28 revealed today, with claims at 217,000, exceeding 210,000 foreseen and 212,000 from October 21. On the other hand, Factory Orders jumped above August’s and forecasts by analysts, as the US economy continues to show resilience and keeps growing above trend.

Meanwhile, the Kiwi enjoyed a rally, sponsored by risk appetite, falling US Treasury bond yields, and a softer US Dollar, following the Fed’s decision. The US 10-year bond yield, which has fallen close to 20 basis points since Wednesday, sits at 4.682%, while the US Dollar Index, loses 0.38%, and dives to 106.26.

NZD/USD Technical Levels