Forex Today: Kiwi drops on RBNZ hold, eyes on US GDP revision

Here is what you need to know on Wednesday, February 28:

The New Zealand Dollar (NZD) came under heavy bearish pressure following the Reserve Bank of New Zealand's (RBNZ) policy announcements early Wednesday. Meanwhile, the US Dollar recovers modestly as market focus shifts to the second estimate of the annualized fourth-quarter Gross Domestic Product (GDP) growth. The European economic docket will feature business and consumer sentiment data. Later in the American session, markets will pay close attention to comments from Federal Reserve (Fed) policymakers.

RBNZ board members decided to keep the Official Cash Rate (OCR) unchanged at 5.5% following the February policy meeting as expected. "Ongoing restrictive monetary policy settings are necessary to guard against the risk of a rise in inflation expectations," the RBNZ said in its policy statement. On a dovish note, the RBNZ lowered the peak cast rate projection to 5.59% in June 2024 from 5.67% in the previous forecast. Commenting on the policy outlook in a press conference, RBNZ Governor Adrian Orr said there was strong consensus among policymakers that rates were sufficient. NZD/USD declined sharply during the Asian trading hours and it was last seen losing more than 1% on the day at 0.6103.

Orr Speech: RBNZ Governor speaks on policy outlook after holding interest rate.

The benchmark 10-year US Treasury bond yield edged slightly higher on Tuesday before stabilizing slightly below 4.3% midweek. In the meantime, US stock index futures trade marginally lower after Wall Street's main indexes closed mixed on Tuesday. 

The data from Australia showed earlier in the day that the Consumer Price Index (CPI) held steady at 3.4% on a yearly basis in January. This reading came in below the market expectation of 3.5%. AUD/USD stays on the back foot and trades deep in negative territory near 0.6500 in the early European morning.

Australian Dollar depreciates amid an improved US Dollar ahead of US GDP Annualized.

EUR/USD continues to push lower toward 1.0800 on Wednesday after closing in negative territory on Tuesday. European Commission will release Economic Sentiment Indicator, Industrial Confidence, Consumer Confidence, Services Sentiment and Business Climate data for February.

USD/JPY declined toward 150.00 but erased a large portion of its losses to close marginally lower at around 150.50 on Tuesday. The pair fluctuates above this level in the European morning on Wednesday. Earlier in the day, the data from Japan showed that the Leading Economic Index improved slightly to 110.2 in December from 110.0.

Japanese Yen hangs near weekly low against USD, looks to US GDP/Fedspeak for fresh impetus.

GBP/USD lost its traction and dropped toward 1.2650 to start the European session on Wednesday following Tuesday's indecisive action. 

Gold met resistance near $2,040 on Tuesday and retreated to the $2,030 area by the end of the day on Tuesday. XAU/USD fluctuates in a tight range slightly below $2,030 on Wednesday.