• NZD/USD advances more than 1% as the Fed hints end of rate hikes.
• The Fed’s SEP confirmed rates in the US are at the highest level expected by policymakers.
• Fed officials project at least three rate cuts for 2024.

The NZD/USD surged more than 1% on Wednesday as the Federal Reserve shifted dovish, as Fed Chair Jerome Powell turned dovish as he answered a question that “we likely at or near peak for rates,” sponsoring another leg up on the Kiwi. At the time of writing, the NZD/USD trades volatile within the 0.6120/0.6200 area.

NZD/USD soars as the Fed turns dovish

As of writing, the Fed Chair Jerome Powell is crossing the wires, he has shifted dovish, adopting a more neutral stance. He said they could be at peak rates while adding it’s too far to declare victory on inflation. When asked of a possible recession, there is a possibility for the next year, but said “I have always felt there was a possibility economy could avert recession while inflation came down, and so far that's what we are seeing. That said, the result is not guaranteed.”

The US central bank stated there are some signals that monetary policy effects are being felt, as growth has eased and the jobs market has moderated. They said inflation data is better than expected, but it remains elevated.

Moving to the Summary of Economic Projections (SEP) officials expect rates to peak at 5.4%, while for 2024, they expect 80 basis points of rate cuts.

Regarding GDP, the central bank estimates the country will grow from 2.1% to 2.6%, and the Fed’s preferred gauge for inflation, the PCE to slump below 3%, while Core PCE is foreseen to edge lower from 3.7% to 3.2%

NZD/USD Hourly Chart – Reaction to Fed’s decision

NZD/USD Technical Levels