• NZD/USD bulls take control following the Fed.
  • Risk is on which is bullish for the kiwi for the coming sessions ahead. 

NZD/USD is heading into the Asian shift on the bid following the Federal Reserve event that took the US dollar down a peg or two.

The Fed’s chair, Jerome Powell, reassured markets that while economic data was indeed much stronger, it was too early to talk of tapering stimulus.

”The FOMC will be very cautious about unsettling accommodative financial market conditions, as engineering a vigorous and rapid recovery to minimise scarring is the policy objective,” analysts at ANZ bak have stated,

”There are still 8.4m fewer jobs than pre-pandemic and still significant risks around COVID despite the successful vaccination programme. FX will take its lead from developments in US breakeven inflation and bond yields.”

Meanwhile, world shares stayed close to record highs while the dollar and Treasury yields slipped after the Fed which has boosted the bird also. 

Ris is on following the central bank noting that progress on vaccines and economic recovery in a slightly less negative tone than its description in March.

This left some investors speculating that tapering could be on the cards sooner than anticipated.

”The proportion of the population that has had at least one COVID-19 vaccination shot has almost doubled since the March FOMC meeting,” analysts at ANZ Bank said.

”Fed policy settings and fiscal stimulus are certainly geared towards pushing inflation expectations up, but it could be a bit uncomfortable for markets when policymakers actually succeed in doing so and feel it’s time to take their foot off the gas – or even talk about the possibility. For now, though, Powell made it clear in the press conference that the labour market is key, and that that’s a long way from where it needs to be.”

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