During the Asian session on Friday, the NZD/USD pair exhibited positive movement, hovering around 0.5960. The New Zealand Dollar (NZD), renowned for its sensitivity to risk sentiment, experienced a surge as risk appetite strengthened, bolstering the NZD/USD pair. However, the pair relinquished some of its intraday gains due to a resurgence in the US Dollar (USD).
The US Dollar Index (DXY), gauging the USD against six major currencies, inched upwards towards 105.70. Nevertheless, the USD’s upward trajectory may encounter constraints amidst a corrective pullback in US Treasury yields, which contributes to the currency’s vulnerability.
On Thursday, mixed preliminary data from the United States (US) exerted pressure on the Greenback. Notably, the US Gross Domestic Product Annualized (Q1) expanded at a slower pace of 1.6%, down from the previous reading of 3.4%, falling short of market expectations of 2.5%. This deceleration hints at potential headwinds or slowdowns across various sectors of the economy.
Conversely, US consumer prices exhibited resilience, with the Personal Consumption Expenditures (QoQ) Price Index for Q1 registering a 3.7% annual rate increase. This surpassed both market projections of 3.4% and the previous reading of 2.0%, underscoring persistent inflationary pressures that may influence Federal Reserve (Fed) monetary policy decisions.
On the New Zealand Dollar front, Friday’s ANZ-Roy Morgan Consumer Confidence dipped to 82.1 in April from the prior reading of 86.4, marking its lowest level since 2008. Despite this decline, New Zealand’s consumer confidence remains relatively elevated. Additionally, Stats NZ reported a trade surplus in March, propelled by exports hitting a 10-month high while imports dropped to a 2-month low. The decline in imports mirrors a sluggish economy as both households and businesses contend with the ramifications of high interest rates.
Looking ahead, investor focus pivots towards the US Personal Consumption Expenditures (PCE) Price Index data for March, slated for release on Friday. This dataset is poised to attract substantial interest as investors evaluate its implications for inflationary pressures and potential ramifications on US monetary policy.
