NZD/USD gathers strength near 0.6050 in Thursday’s early Asian session.
Trump considers naming next Fed chair early.
Traders raise their bets of Fed rate cuts in the July policy meeting.
The NZD/USD pair trades in positive territory around 0.6050 during the early Asian session on Thursday. The US Dollar (USD) weakens against the Kiwi due to concerns about the future independence of the US Federal Reserve (Fed). Traders brace for the US economic data, including the final Q1 GDP Growth Rate, Durable Goods Orders, and weekly Initial Jobless Claims, which are due later on Thursday.
The Wall Street Journal reported early Thursday that US President Donald Trump is considering selecting and announcing a successor for Federal Reserve (Fed) Chair Jerome Powell by September or October. According to one of these sources, Trump's ire against Powell may lead to an even earlier announcement this summer. The concerns of Fed independence and credibility could undermine the Greenback in the near term.
Fed officials still expect to reduce interest rates this year, but the timing remains uncertain as policymakers wait on coming trade deadlines and hope for more certainty about the scope of the tariffs. Financial markets have priced in nearly a 25% chance of a Fed rate cut in July, up from 12% a week ago, according to the CME FedWatch tool.
The New Zealand Dollar (NZD) receives support from stronger Q1 Gross Domestic Product (GDP) data as well as a better-than-expected May Trade Surplus. Traders expect the Reserve Bank of New Zealand (RBNZ) to deliver only one more rate cut in the current easing cycle, likely to be fully priced in by November.
However, caution lingered amid uncertainty over the ceasefire’s durability. Israeli Prime Minister Benjamin Netanyahu warned that Israel “will strike again” if Iran “thinks of rebuilding” its nuclear program. Any signs of renewed escalation could underpin the US Dollar and create a headwind for NZD/USD.
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