NZD/USD advances near 0.6900 ahead of China’s stimulus, Fed’s policy weighs DXY

• NZD/USD has advanced near 0.6900 on the announcement of helicopter money from China.
• The DXY has weakened amid risk-on impulse in the market.
• Kiwi bulls got stronger on upbeat GDP numbers.

The NZD/USD pair has advanced sharply near 0.6900 on multiple positive triggers in the market. The recent resurgence of Covid-19 in China has renewed the fears of a pandemic in the world. In response to the rising cases of Covid-19, the China administration has imposed severe lockdown measures to corner the spread of the Omicron variant, detected in the Covid-19 patients. Apart from that China’s Vice Premier Liu He has signaled more stimulus to support Chinese markets.

The announcement of stimulus has brought optimism for the antipodean as New Zealand is one of the leading exporters to China.

Meanwhile, the underperformance of the US dollar index (DXY) has also underpinned the kiwi against the greenback. The DXY has plunged near 97.60 after the announcement of the interest rate decision by the Federal Reserve (Fed). Fed Chair Jerome Powell increased the interest rates by 25 basis points (bps). The announcement expanded the demand for risk-perceived assets significantly. Also, the antipodeans were trading strong when risk-sensitive assets were going through the carnage. Therefore, underperformance from the DXY firmed bids for the kiwi further.

Apart from that, the outperformance from the yearly Gross Domestic Product (GDP) numbers, which were reported on Thursday, strengthened the kiwi further. The yearly kiwi GDP landed at 3.1%, much higher than the previous print of -0.2%.