The NZD/USD pair encountered persistent selling pressure around the 0.5970 mark, retreating from the 0.6000 level during the Asian trading session on Friday. The New Zealand Dollar (NZD) felt the weight of dovish remarks made by Reserve Bank of New Zealand (RBNZ) Governor Adrian Orr. Market participants eagerly anticipate the release of US February Personal Consumption Expenditures (PCE) data later in the day, seeking fresh market catalysts.
The latest data from the Bureau of Economic Analysis unveiled a stronger-than-expected expansion of the US economy in the fourth quarter (Q4), driven by robust consumer spending and corporate investment. The final estimate of US Gross Domestic Product (GDP) for Q4 revealed an annual growth rate of 3.4%, surpassing the previous estimate of 3.2%. This positive economic news bolstered the US Dollar (USD), prompting upward movement in its value.
Meanwhile, Governor Orr’s comments conveyed the RBNZ’s commitment to restoring inflation to its target range, while also suggesting that interest rates have reached their peak and potential cuts are on the horizon. The RBNZ hinted at the possibility of rate cuts as early as next year, although market sentiment reflects expectations for rate reductions to commence as soon as August this year. Consequently, the NZD faced downward pressure, acting as a deterrent for the NZD/USD pair.
Investor focus now shifts to the impending release of US Core PCE data, projected to show a month-on-month increase of 0.3% and a year-on-year rise of 0.8% in February. A stronger-than-anticipated report could further strengthen the USD. Additionally, Federal Reserve Chair Jerome Powell and Fed Bank of San Francisco President Mary Daly are scheduled to deliver speeches later in the day, potentially influencing market sentiment further.
