Ella 
In early trading in Asia on Tuesday, the New Zealand dollar/US dollar rose slightly, closing higher for the second consecutive day. The market expects the Federal Reserve (Fed) to keep interest rates unchanged at Wednesday’s meeting, and a weak U.S. dollar supported a slight gain in NZD/USD.
Economic events in New Zealand were light, with headlines about China’s economic woes still in focus. Any signal of China’s economic slowdown may drag down the NZD/USD, which is a proxy for China’s economic outlook, and be negative for the NZD/USD. Statistics New Zealand will release the country’s second-quarter gross domestic product on Thursday. Previously, New Zealand’s GDP quarterly and annual rates were -0.1% and 2.2% respectively.
On the other hand, the market generally expects the Federal Reserve to pause raising interest rates while retaining the prospect of another rate hike. The Fed is not expected to surprise markets, with a 99% chance of keeping rates unchanged, according to the CME FedWatch tool. Federal Reserve Chairman Jerome Powell’s press conference may provide hints on the future path of interest rates, and any time Fed officials release a dovish stance may trigger a decline in the US dollar (USD).
Next, market participants will pay close attention to the Federal Reserve policy meeting to be announced at 2:00 Beijing time on Thursday. The market is generally expected to keep interest rates unchanged at 5.5%. Market focus will shift to Federal Reserve Chairman Jerome Powell’s press conference at 2:30 Beijing time on Thursday for some hints about the “dot plot” and inflation expectations. Later this week, New Zealand’s second-quarter gross domestic product will be released on Thursday. These data could give NZD/USD a clear direction.
