- NZD/USD gains traction to around 0.5860 in Tuesday’s early Asian session.
- Trump said he is removing Lisa Cook from the Fed board.
- The RBNZ’s dovish tone might cap the Kiwi’s upside.
The NZD/USD pair gains ground to near 0.5860 during the early Asian session on Tuesday. The US Dollar (USD) weakens against the New Zealand Dollar (NZD) amid concerns over Federal Reserve (Fed) independence after the report that US President Donald Trump says he is removing Fed Governor Lisa Cook.
Reuters reported early Tuesday that Trump said that he was removing Fed Governor Cook from her position on the Fed’s board of directors. Trump made the announcement in a letter to Cook that he posted on social media.
Cook’s exit will allow Trump to tap a replacement, helping him to exert more control over Fed policy. Concerns about the central bank’s independence could exert some selling pressure on the USD and act as a tailwind for the pair in the near term.
New Zealand’s Retail Sales rose 0.5% QoQ in the second quarter (Q2) versus a 0.8% increase in Q1, Statistics New Zealand reported Monday. This figure came in above market expectations of a 0.2% gain. Meanwhile, Retail Sales ex Autos climbed 0.7% for the same period, compared to a 0.4% gain in the previous period. The upbeat Retail Sales boost the Kiwi against the USD.
However, the Reserve Bank of New Zealand’s (RBNZ) dovish tone might cap the upside for the NZD. The New Zealand central bank cut the Official Cash Rate (OCR) by 25 basis points (bps) to 3.0% at its August meeting last week.
The RBNZ signalled further reductions in the coming months as policymakers warned of domestic and global headwinds to growth. Markets are now pricing in nearly a 50% possibility of a move in October and over a 100% chance for November, according to Reuters.
