Ella 
In Asia on Wednesday, the NZD/USD pair broke its seven-day winning streak. However, downside may be limited for NZD/USD due to continued weakness in the U.S. dollar and falling U.S. bond yields. As of press time, the New Zealand dollar/US dollar was trading at 0.6261, an intraday decline of 0.09%.
Earlier on Wednesday, Reserve Bank of New Zealand (RBNZ) Governor Adrian Orr said they were surprised by last week’s contraction in gross domestic product but did not yet know what that meant for the outlook for interest rates. He added that New Zealand’s GDP data was unexpectedly subdued, while also mentioning that there was still a long way to go as inflation remained too high.
Separately, the People’s Bank of China decided on Wednesday to keep the one-year and five-year loan prime rates (LPR) unchanged at 3.45% and 4.20% respectively.
In terms of the dollar, Federal Reserve Chairman Powell said it was too early to declare victory over inflation or discuss the timing of an interest rate cut. However, he noted that core inflation has been at an annual rate of just 2.5% over the past six months, not far from the central bank’s 2% inflation target. Markets expect the Fed to keep its benchmark interest rate steady at its January meeting but could start cutting rates as soon as March, according to the CME Group’s FedWatch tool.
Next, market participants will focus on U.S. existing home sales data due later on Wednesday. Since New Zealand has no important data to release this week, NZD/USD fluctuations will still be affected by USD price fluctuations.
