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NZ dollar rebounds as Fed holds rates steady
The Fed left the fed funds target unchanged at 3.50% to 3.75% in a 9 to 3 vote, pushing the US dollar lower and lifting NZD/USD toward 0.5790.
The New Zealand dollar rebounded on Wednesday against the US dollar, with NZD/USD trading higher near the 0.5790 area after reversing an earlier decline as the US dollar weakened sharply following the Federal Reserve’s monetary policy announcement, FXStreet reports.
FXStreet said the pair initially fell amid renewed Middle East tensions that boosted demand for safe-haven assets, a shift that also lifted oil prices and revived concerns that higher energy costs could keep global inflation elevated.
The Fed left the fed funds rate unchanged within the 3.50% to 3.75% range, a decision approved by a divided 9 to 3 vote. According to FXStreet, Cleveland Fed President Beth Hammack, Minneapolis Fed President Neel Kashkari, and Dallas Fed President Lorie Logan supported a 25-basis-point increase.
Despite hawkish language in the Fed statement, FXStreet noted markets cut back on expectations for a September rate increase after the decision to stay on hold raised doubts about whether a majority of officials will support tightening at the next meeting. FXStreet also cited near-term technical levels, saying NZD/USD was holding above key moving averages around 0.5784 to 0.5791.