NZD/USD trades strongly below 0.6100 following New Zealand GDP data

• NZD/USD gains ground around 0.6090 on the weaker USD. 
• New Zealand's GDP for Q4 came in at -0.1% QoQ vs. -0.3% prior, weaker than expected. 
• The Fed held interest rates steady at its March meeting on Wednesday, as widely expected. 
• The US S&P Global PMI for March will be due on Thursday. 

The NZD/USD pair trades on a stronger note below the 0.6100 mark during the early Asian session on Thursday. The decline of the US Dollar (USD) after the Federal Reserve (Fed) left its interest rates unchanged and Fed Chair Jerome Powell delivered a dovish message to provide some support to the pair. NZD/USD currently trades around 0.6090, gaining 0.15% on the day. 

The latest data from Statistics New Zealand on Thursday showed that the nation’s GDP growth number contracted 0.1% QoQ in the fourth quarter from the previous reading of 0.3% contraction. The Annualized GDP for Q4 shrank 0.3% YoY from the 0.6% contraction in the previous reading. Both figures came in worse than market expectations, which might cap the upside of the New Zealand Dollar (NZD). 

On the other hand, the Fed held the rate steady at 5.25–5.50% at its March meeting on Wednesday, with the median dot plot for 2024 unchanged from the 75 basis points (bps) of cuts shown in the December projections. During the press conference, Fed Chair Jerome Powell stated that a strong labour market Data wouldn’t deter the central bank from cutting rates. Powell emphasized that the central bank will wait for more data that inflation is sustainably moderating toward its 2% target. 

Furthermore, Fed’s Powell reiterated that policymakers still intend to cut rates before the end of this year, given economic growth continues. The dovish comments from Powell exert some selling pressure on the Greenback and create a tailwind for NZD/USD. 

Looking ahead, traders will keep an eye on the preliminary US S&P Global Purchasing Managers Index (PMI) for March, the weekly Initial Jobless Claims and Existing Home Sales. On Friday, New Zealand’s Trade Balance will be released.