The Kiwi picked up bids to 0.7155, inside a short-term range, during the early Asian session trading on Tuesday. The pair posted minor gains the previous day as the US dollar buyers took a breather and economic forecasts from the New Zealand Institute of Economic Research (NZIER) printed an optimistic scenario. Though, tapering fears and a return of Aussie, as well as Chinese, traders after a long weekend could test the recovery moves.
In its latest economic NZIER said, “Beyond the weaker starting point for GDP growth, the near-term growth outlook has been revised up. On average, annual average growth in GDP is expected to reach 5 percent in March 2022.” The New Zealand forecaster also said, “Although the longer-term employment growth outlook has been revised lower, the unemployment rate has also been revised lower over the projection reflecting the tighter labor market. Inflation forecasts have been revised higher across the projection.”
While the rising amendment to the NZ economic forecasts favored the NZDUSD pair, a break in the US dollar index bullish momentum and careful mood in the market restricted the moves. Additionally, off in Australia and China offered extra barriers to the NZD/USD momentum.
The early signals of the US inflation, as per St. Louis Fed and New York Fed, have been in the recovery mode and warrant the traders’ caution ahead of Wednesday’s Federal Open Market Committee (FOMC). With the previous, the US 10-year Treasury yields stayed on the recovery mode towards 1.5% whereas Wall Street benchmarks closed mixed on Monday.
Later in the day, Kiwi traders will pay close attention to how its biggest trading partners, namely Australia and China, react to the latest developments. However, fears of the key FOMC and NZ GDP release may restrict the pair’s immediate performance ahead of today’s US Retail Sales for May.
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