New Zealand dollar moves higher following dovish FOMC testimony

Key Movers

The Greenback moved lower against G10 currencies overnight following Federal Reserve Chairman’s semi-annual testimony to congress overnight in Washington DC. A dovish statement which noted concerns over the global economy and weak inflation has pointed to a clear path to the first interest rate cut by the Fed since 2008 when they meet on July 31st. The US Dollar Index (DXY) finished 0.4% lower for the day along with a 0.5% drop against the Japanese Yen.Chinese inflation came in at expectations of 2.7% y/y as the prices of goods purchased and sold by producers (PPI) came in neutral with risks that deflation is on the horizon. PPI was lower due to oil prices and growing concerns of a weaker economy with the reading its lowest in nearly three years.A raft of UK driven macro data saw the Sterling move higher overnight, supported also by the decline of the greenback. GDP figures were positive for the month of May, growing by 0.3% following April’s contraction of 0.4%. Despite manufacturing production contracting slightly to 1.4%, the Great British Pound moved north to tops of 1.2490 before pushing through the 1.2500 handle as Fed Chair Powell released his testimony. It was reiterated by PM front runner Boris Johnson that a no-deal Brexit was extremely unlikely to happen.With eyes continuing to be focused on the world’s largest economy, CPI figures are slated for release overnight. Weak inflation was noted in the latest FOMC minutes and continues to be assessed for a bias to trim interest rates in the future. The reading for the month of June is expected to remain unchanged with core CPI expected to have increased by 0.2%.