NZD/USD scales higher after picking bids around 0.6230, Fed policy eyed

• NZD/USD has attempted to overstep the immediate hurdle of 0.6240 as DXY weakens further.
• The tedious job of Fed policymakers has triggered slowdown signals vigorously.
• The kiwi buyers will focus on ANZ Business Confidence this week.

The NZD/USD pair has turned sideways after a modest recovery from the intraday low at around 0.6230. The asset has defended Tuesday’s low at 0.6224 and is likely to extend its recovery as the US dollar index (DXY) is looking downside for an establishment.

The DXY is auctioning below the critical support of 107.00 as the market participants have already discounted the rate hike announcement by Federal Reserve (Fed) chair Jerome Powell.

The Fed has no other option than to step up the interest rates further as price pressures are soaring and are hurting the paychecks of the households. The laborious job of Fed policymakers to trim demand by elevating interest rates and elevate supply for restoration of modest prices without dragging the economy into recession is getting heated now.

Retail demand has taken the bullet as the US Consumer Confidence has dropped to the lowest since February 2021 to 95.7 and giant retail-chain operator Walmart has reported weak earnings. One could extract the fact from the lower earnings of Walmart and the upbeat US Retail Sales that the economic data was strongly driven by a higher inflation rate rather than the buying quantities by the individuals.

On the kiwi front, the Reserve Bank of New Zealand (RBNZ) will monitor the performance of policy tightening to understand whether the central bank is in the right direction towards containing price pressures. On the economic data front, investors will focus on the release of the ANZ Business Confidence, which is due on Thursday. The economic data may improve to -55 vs. the prior release of -62.6.