The Kiwi Dollar opens higher as the USD weakened following US Fed Chairman Powell’s testimony to Congress overnight. The NZD has gained around half a cent and is up on all major cross rates this morning.
Powell Delivers Dovish Statement
The US Dollar lost ground across the board as US Fed Chairman Jerome Powell delivered a dovish statement to Congress, which has reinforced the likelihood of a rate cut later this month. FOMC Meeting minutes released shortly after Powell’s speech reinforced the dovish message, with many participants seeing near term cuts if global trade and other risks continue to weigh on the economic outlook. Rate cut expectations had diminished after the strong employment numbers from last week, and the resumption of U.S – China trade talks this week. A 0.25% cut has been priced in by markets, while the chances of a 0.5% cut have now improved to around 25%, up from virtually no chance earlier in the week.
UK GDP Bounces Back
The British Pound was firmer overnight as UK GDP grew in the month of May, following on from a decline in April. GDP rose 0.3% vs a 0.4% fall the previous month. The expansion was in line with market expectations and gave the Pound some relief after several days of losing ground.
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