• Dovish speech of the Federal Reserve Chair Jerome Powell weighed on the US Dollar.
• Fed’s Powell opened the door for a 50bps rate hike in the December meeting.
• The New Zealand Dollar ignored a worse-than-expected Business Confidence report, as shown by the NZD/USD rising.

The New Zealand Dollar (NZD) soars sharply against the US Dollar (USD), towards the 200-day Exponential Moving Average (EMA) at 0.6290, following a speech of the US Federal Reserve (Fed) Chair Jerome Powell on Wednesday. At the time of writing, the NZD/USD is trading at 0.6302.

Sentiment shifted positively on dovish remarks by the Fed Chair Jerome Powell, who opened the door for slower rate hikes, since December. In his speech, Fed Chair Powell said that moderating interest-rate increases made sense and could happen as soon as the December meeting. The US central bank Chair added that rates would get higher than projected in September and remain restrictive for “some time.”

Following the Fed Chair Powell speech, money market futures odds for a 50 bps rate hike lie at 75%, while there is a 25% chance of 75. Meanwhile, swaps futures expect the Federal Funds rate(FFR) to peak under 5% by May 2023.

Also read: Breaking: Fed chair Powell speech sends US Dollar lower

On the New Zealand front, the economic docket featured Business Confidence for November, which dropped to -57.1 in November 2022 from -42.7 in October, as firms continued to grapple with intense inflationary pressures, declining margins, labor shortages, and tightening financial conditions. Activity measures were generally lower, led by sharp falls in ease of credit, profit expectations and own activity outlook.

NZD/USD Key Technical Levels