The NZD/USD pair experienced a pullback, hovering around 0.5950 during Tuesday’s Asian session. The resurgence of the US Dollar (USD) has exerted pressure on the pair, possibly fueled by hawkish comments from officials at the US Federal Reserve (Fed), signaling a reluctance towards immediate rate cuts.
According to a report by The Economic Times on Monday, Fed Chair Jerome Powell remarked that it might take “longer than expected” to attain confidence in inflation moving towards the central bank‘s 2% target. Powell also emphasized the Fed’s ability to maintain high rates “as long as needed.” Additionally, Fed Governor Michelle Bowman expressed concerns regarding “upside risks” to inflation. Meanwhile, Minneapolis Fed President Neel Kashkari hinted at the possibility of no rate cuts occurring this year.
The US Dollar Index (DXY), measuring the USD’s performance against six major currencies, has edged higher to near 105.80 as of the latest update. Traders are keenly awaiting Wednesday’s release of key economic data from the United States (US), including the ADP Employment Change and ISM Manufacturing PMI, in addition to the Fed Interest Rate Decision. These events are expected to shape market sentiment and influence USD movements.
In New Zealand, the ANZ Business Confidence dropped to 14.9 in April from March’s reading of 22.9, marking the third consecutive month of decline and reaching its lowest level since last September. This data suggests a significant weakening of the economy, likely impacted by the Reserve Bank of New Zealand’s (RBNZ) decision to raise interest rates.
Furthermore, amidst diminishing concerns about a potential conflict between Israel and Iran, growing optimism regarding peace talks between Israel and Hamas in Cairo is boosting investors’ appetite for riskier currencies such as the New Zealand Dollar (NZD). This sentiment could help mitigate the losses of the NZD/USD pair.
