NZD/USD oscillates in a narrow range below 0.6200 ahead of RBNZ rate decision

• NZD/USD consolidates around 0.6170 in Wednesday’s early Asian session. 
• The Reserve Bank of New Zealand (RBNZ) is expected to keep the interest rate steady at 5.50% in February. 
• Hawkish comments from Fed Governor Bowman and Kansas City Fed President Schmid provided little support to the USD. 
• The US GDP growth numbers for Q4 will be due later on Wednesday. 

The NZD/USD pair oscillates in a narrow trading range above the mid-0.6100s during the early Asian session on Wednesday. Investors prefer to wait on the sidelines ahead of the Reserve Bank of New Zealand (RBNZ) Interest Rate Decision, with no change in rate expected. At press time, NZD/USD is trading at 0.6170, gaining 0.06% on the day. 

The RBNZ is expected to keep the Official Cash Rate (OCR) steady at 5.50% for the fifth meeting in a row. However, the possibility of a rate hike cannot be ruled out. Investors will monitor RBNZ Governor Adrian Orr’s press conference, which might offer some hints about the monetary policy and inflation outlook. If the New Zealand central bank surprises markets with a 25 basis points (bps) rate hike, the New Zealand Dollar (NZD) might attract some buyers. On the other hand, the dovish comments from RBNZ could drag the NZD lower and create a headwind for the NZD/USD pair. 

On the USD’s front, hawkish comments from Federal Reserve (Fed) officials provided little support to the US Dollar (USD). Fed Governor Bowman said inflation will continue to decline with interest rates held at current levels, but it is not yet time to start lowering rates, while Kansas City Fed President Schmid stated that there is no need to preemptively adjust the stance of monetary policy as inflation is running above target, labor markets are tight, and demand is showing considerable momentum. 

Investors will closely watch the US Gross Domestic Product Annualized for the fourth quarter (Q4) on Wednesday, along with preliminary Goods Trade Balance, Fed’s Bostic, Collins, and Williams speeches. The attention will shift to the Fed’s preferred inflation measure, the Personal Consumption Expenditures Index (PCE) report on Thursday. The stronger-than-expected data might lift the Greenback and cap the upside of the NZD/USD pair.