Before the Federal Reserve’s interest rate decision and the second-quarter gross domestic product (GDP) figures, the New Zealand dollar (NZD) plunged against the US dollar (USD), lowering the NZD/USD market below 0.7000.

First, on July 28, 2021, the Federal Reserve Board of Governors will declare the interest rate. The Consensus of FXStreet.com stated that the interest rate might register a reading of 0.25% this month while bearing no change compared to the previous month’s data.

A rate hike usually boosts the local currency since it is a sign of robust inflation. A rate drop, on the other hand, is a symptom of economic and inflationary problems. If rates remain steady, the focus will shift to the tone of the Federal Open Market Committee (FOMC) and whether it is hawkish or dovish on future inflation trends.

Then, on July 29, 2021, the GDP Price Index from the Bureau of Economic Analysis, Department of Commerce will release. Economists predict that the GDP would grow by 5.4% in the second quarter of this year, compared to 4.3% in the previous quarter.

Changes in the GDP price index are watched for signs of inflationary pressure, which could signal a rise in interest rates. In general, a high reading for the USD is positive or bullish, whereas it is unfavorable for the NZD/USD.

Both these updates predict the bearish market for NZ dollar ahead, but, on the other side, the New Zealand building permit will release that might bring hope to NZD/USD.

Conclusion

Given the pair’s micro-macro-economic outlook over the last few days, selling the NZD/USD pair could result in more gains in short to medium-term trading.