Ella 
In the Asian market on Thursday, the New Zealand dollar/US dollar faced heavy selling pressure for the third consecutive day. This was also the sixth day of decline in the previous seven days, falling to the lowest level since early November 2022. NZD/USD is currently trading around 0.5825, down more than 0.40% on the day, and appears to be easily extending its recent decline from around 0.6055, the monthly high hit last week.
Sentiment remains fragile amid growing concerns that the Israel-Hamas conflict could spread to the Middle East, especially after hundreds of Palestinians were allegedly killed in a Gaza hospital. This in turn favors the safe-haven US dollar (USD) and drives outflows away from the risk asset NZD. In addition to this, a growing number of analysts believe that the Federal Reserve (Fed) will maintain higher interest rates for longer, which is another factor supporting the US dollar and weighing on NZD/USD.
Improved U.S. retail sales data released on Tuesday showed that the U.S. economy was strong after the end of the third quarter and raised expectations for third-quarter gross domestic product (GDP). The data also raised concerns about persistently higher inflation, which could allow the Federal Reserve to stick to its hawkish stance and keep interest rates higher for longer. This, in turn, led to a prolonged sell-off in U.S. fixed income markets and continued to push U.S. bond yields higher. In fact, the 10-year U.S. Treasury yield jumped to a 16-year high and is approaching the 5% mark.
However, current market pricing suggests that the Fed is more likely to keep interest rates steady for the second consecutive time in November. This in turn prevents aggressive bets from USD bulls, even if it provides little support for NZD/USD. The market is now focused on US macro data, with US initial jobless claims last week, Philadelphia Fed manufacturing index and existing home sales data providing new impetus for NZD/USD. However, Federal Reserve Chairman Jerome Powell will speak later in the U.S. session, which will remain the focus of market attention.
