NZD/USD pares Fed-inspired gains below 0.6300 on downbeat NZ Q1 GDP

• NZD/USD takes offers to refresh intraday low after NZ Q1 GDP disappoints.
• New Zealand Q1 GDP drops to -0.2% QoQ versus 0.6% expected.
• Fed’s rate hike, economic forecasts failed to impress USD bulls on Powell’s measured tone.
• Aussie data/events, risk catalysts can entertain intraday traders.

NZD/USD fails to hold the post-Fed gains as it slumps nearly 20 pips after New Zealand’s Q1 Gross Domestic Product (GDP) release on early Thursday morning in Asia. That said, the quote rose the most in a week the previous day before dropping back to 0.6265 at the latest.

New Zealand’s Q1 GDP dropped to -0.2% on QoQ compared to 0.6% market forecasts and 3.0% previous readings. Further details suggest the YoY figures easing to 1.2% versus 3.3% market consensus and 3.1% prior.

Ahead of the NZ GDP release, global rating agency Fitch mentioned that New Zealand's large banks are well-placed for rising interest rates, suggesting Fed-liked interest rate announcements, which in turn should have favored the NZD/USD buyers but could not. The reason could be linked to the market’s consolidation of the Fed-linked moves amid a quiet Asian session.

The US Federal Reserve (Fed) announced the biggest interest rate hike since 1994 to battle inflation fears. The US central bank also revised up inflation forecasts for this year and the next while cutting down the inflation expectations. However, the Fed’s rejection of the odds of a 100 bp rate increase and Chairman Jerome Powell’s measured comments seem to have drowned the Treasury yields and the US dollar afterward. The policymakers also signaled either a 50 bp or 75 bp rate hike in the next meeting.

Looking forward, NZD/USD traders will pay attention to Australia’s data/events including Consumer Inflation Expectations for June, the jobs report for May and the Reserve Bank of Australia’s (RBA) quarterly Bulletin. However, major attention will be given to the Asian market’s reaction to the Fed moves, as well as the US data/events.

Technical analysis

NZD/USD fades the bounce off yearly low below the two-week-old resistance line, around 0.6320 by the press time, which in turn suggests the quote’s further fall towards retesting the yearly bottom surrounding 0.6200.