NZD/USD pinned in place near 0.6130 as investors gear up for Wednesday’s Fed rate call

• NZD/USD continues to hold above 0.6100 with limited pullback.
• NZ GDP to be overshadowed by Fed’s last meeting of 2023.
• Fed dot plot to be the key highlight for Wednesday.

The NZD/USD continues to cycle in a rough range between 0.6100 and 0.6180 in a sideways grind that has kept the pair strung in place for December trading. 

New Zealand’s Gross Domestic Product (GDP) for the third quarter is slated to be released in the early Thursday session, but before that can happen the NZD/USD pair is set to run headfirst into Wednesday’s Federal Reserve (Fed) rate call, and broader markets are shifting to turn focus onto the US central bank’s interest rate outlook.

The Federal Reserve will be releasing their updated Dot Plot, the Fed’s own forward-looking Interest Rate Projections, and global markets eager for a ‘sooner rather than later’ path toward Fed rate cuts will be looking keenly at the dot plot to see if the Fed’s rate outlook matches investor expectations. Markets are currently expecting the Fed to be battled back into a rate cut cycle as soon as the end of the first quarter in 2024.

The Fed is broadly expected to hold flat on rates at 5.5% for its last rate call of 2023, but investors will be keeping a close eye on the Fed’s Monetary Policy Statement to sniff out the extent to which the Fed is leaning into either a hawkish or dovish stance.

NZ’s GDP is expected to come in broadly softer, with QoQ GDP growth forecast to decline from 0.9% to 0.2%, and the annualized figure is expected to trim back from 1.8% to 0.5% as the New Zealand economy teeters on the edge of a recession.

NZD/USD Technical Outlook

The Kiwi’s intraday action sees the NZD/USD capped by the 200-hour Simple Moving Average (SMA) near 0.6150, and near-term chart action has been largely constrained into the midrange.

Despite the NZD/USD’s near-term flat trading, the pair remains on the high side of the 200-day SMA, buoyed above the 0.6100 handle and the pair has seen little pullback after getting vaulted from year-long lows near 0.5800 in late October.

The 50-day SMA is accelerating towards bullish territory, pushing into the 0.6000 major handle as bids remain pinned in high ground.

NZD/USD Hourly Chart

NZD/USD Daily Chart

NZD/USD Technical Levels