Fed hike bets keep USD bulls focused on crucial data as New Zealand Dollar stays under pressure

The previous day’s recovery from the post-RBNZ swing low fails to gather momentum in NZD/USD.
Renewed USD demand, driven by hawkish Fed expectations and geopolitical risks, puts spot prices under pressure.
For fresh direction, traders await the Advance US Q3 GDP report and US PCE data.

Renewed US Dollar (USD) demand leaves NZD/USD looking vulnerable around 0.5620. After a modest rise to the 0.5635-0.5640 region during Thursday’s Asian session, the pair encounters selling pressure. This halts the previous day’s rebound from a two-week low reached following the Reserve Bank of New Zealand (RBNZ) policy update.

TMGM Analysis: Financial Market News, Economic Calendar & Market Insights

A combination of supportive factors helps the USD Index (DXY), which measures the Greenback against a basket of currencies, resume its advance after Wednesday’s post-FOMC corrective decline from a two-week high. Speaking to reporters, US Federal Reserve (Fed) Chair Kevin Warsh said the central bank remained alert to persistent inflation and geopolitical risks. Alongside concerns over energy-led price pressures, his remarks reinforce expectations of further Fed tightening. Traders assign around an 80% probability to another increase in borrowing costs by the US central bank in December, according to the CME Group’s FedWatch Tool. Fears of a further escalation in Middle East tensions also lend support to the safe-haven dollar.

Geopolitical concerns remain in focus after The Wall Street Journal reported on Tuesday that US officials had told several Gulf Arab countries to prepare for a short, intense military campaign against Iran following the November 3 midterm elections. According to Iranian Foreign Minister Abbas Araghchi, the armed forces are ready to defend the country, while Tehran will maintain close contact with intermediaries to give diplomacy a chance. Meanwhile, fierce fighting in Yemen between the Iran-backed Houthis and the Saudi Arabia-backed government sustains the geopolitical risk premium, lending support to the USD. The New Zealand Dollar (NZD), by contrast, remains under pressure after the RBNZ unexpectedly left interest rates unchanged, further limiting the upside in NZD/USD.

Despite this support, USD bulls appear reluctant to take fresh positions before receiving clearer signals on the Fed’s policy trajectory. Attention therefore stays on the upcoming US economic releases: the Advance Q3 GDP report and the Personal Consumption Expenditures (PCE) Price Index. These key figures will be important in shaping USD movements. Nevertheless, the fundamental backdrop outlined above favours USD bulls. Together with the policy divergence between the Fed and the RBNZ, it indicates that the path of least resistance for NZD/USD is still lower.

How Is the US Dollar Performing Today?

The US Dollar recorded its strongest performance against the New Zealand Dollar today. The table below sets out the percentage changes in the US Dollar (USD) against the major currencies listed.

	USD	EUR	GBP	JPY	CAD	AUD	NZD	CHF
USD		0.04%	0.00%	-0.11%	-0.06%	0.01%	0.05%	0.00%
EUR	-0.04%		-0.04%	-0.16%	-0.13%	-0.03%	0.00%	-0.04%
GBP	-0.01%	0.04%		-0.11%	-0.10%	0.00%	0.05%	-0.00%
JPY	0.11%	0.16%	0.11%		0.02%	0.12%	0.13%	0.10%
CAD	0.06%	0.13%	0.10%	-0.02%		0.10%	0.13%	0.10%
AUD	-0.01%	0.03%	-0.01%	-0.12%	-0.10%		0.05%	-0.01%
NZD	-0.05%	-0.00%	-0.05%	-0.13%	-0.13%	-0.05%		-0.01%
CHF	-0.01%	0.04%	0.00%	-0.10%	-0.10%	0.01%	0.00%

Percentage movements between major currencies are displayed in the heat map. Select the base currency in the left-hand column and the quote currency in the top row. For instance, choosing the US Dollar on the left and following its row across to the Japanese Yen gives the percentage change for USD (base)/JPY (quote) in the corresponding cell.