NZD/USD strengthens to near 0.5750 on renewed Fed independence concerns

The NZD/USD pair attracts some buyers to near 0.5745, snapping the four-day losing streak during the Asian session on Monday. The renewed concerns over the US Federal Reserve (Fed) independence exert some selling pressure on the US Dollar (USD) against the Kiwi.

The New York Times reported on Sunday that federal prosecutors opened a criminal investigation into Fed Chair Jerome Powell over the central bank's renovation of its Washington headquarters and whether Powell lied to Congress about the scope of the project.

Powell stated that the NDS threat is not about his testimony or the renovation project but a pretext, adding that threat of criminal charges is a consequence of Fed setting interest rates based on its assessment of the public interest rather than the president's preferences. Powell described the move as unprecedented and a direct challenge to the Fed’s independence.

The Reserve Bank of New Zealand's (RBNZ) hawkish outlook on the future policy path could lift the NZD. RBNZ Governor Ann Breman said that the policy rate is likely to remain at its current level for an extended period if economic conditions unfold as expected. Economists anticipate the Official Cash Rate (OCR) to remain at 2.25% for a period, potentially until mid-2027, before gradually increasing.