NZD/USD soars to near 0.6030 as market sentiment favors risky assets.
The RBNZ surprisingly announced an interest rate cut by 25 bps on Wednesday.
Firm Fed rate-cut prospects keep the US Dollar’s upside limited.
The NZD/USD pair surges to near 0.6030 in Friday’s European session. The Kiwi asset strengthens as appeal for risky assets has improved. Market sentiment improves significantly as fears of the United States (US) entering a recession have ebbed on upbeat Retail Sales for July and lower weekly Jobless Claims in the week ending August 9.
S&P 500 futures have posted decent gains in European trading hours, demonstrating an improvement in investors’ risk-appetite. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, falls to near 102.80.
However, the near-term appeal of the New Zealand Dollar (NZD) remains uncertain as the Reserve Bank of New Zealand (RBNZ) unexpectedly reduced its Official Cash Rate (OCR) by 25 basis points (bps) to 5.25% on Wednesday.
Meanwhile, the next move in the US Dollar will be guided by the market speculation for the Federal Reserve (Fed) interest rate cut path for the entire year. For that, investors await Fed Chair Jerome Powell’s speech at the upcoming Jackson Hole (JH) symposium, which will be held from August 22-24.
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