The NZD/USD pair is trading in negative territory for the third consecutive day, hovering around 0.5855 during the early Asian session on Friday. The continued strength of the US Dollar, which recently reached fresh highs for 2024, is weighing on the Kiwi. Traders are also awaiting the release of key data later in the day, including the flash US S&P Global Purchasing Managers Index (PMI) and the final Michigan Consumer Sentiment report, which could provide further market direction.
US Department of Labor data released Thursday revealed that Initial Jobless Claims fell to 213,000 for the week ending November 16, down from a revised 219,000 (previously 217,000) the week before and below the anticipated 220,000. The stronger-than-expected data suggests that the US labor market remains robust, bolstering the view that the Federal Reserve (Fed) may be able to achieve a soft landing for the economy.
Federal Reserve Chairman Jerome Powell signaled last week that the central bank is not rushing to cut rates, noting that “the economy is not sending any signals that we need to be in a hurry to lower rates.” Additionally, Chicago Fed President Austan Goolsbee indicated on Thursday that the pace of rate cuts may slow, as inflation is expected to ease toward the Fed’s 2% target. This cautious stance continues to support the US Dollar and acts as a headwind for NZD/USD.
Meanwhile, the New Zealand Dollar is under pressure as market participants increase bets that the Reserve Bank of New Zealand (RBNZ) will cut interest rates by 50 basis points (bps) at next week’s meeting. Shannon Nicoll, associate economist at Moody’s Analytics, noted that with New Zealand’s economy growing sluggishly and a weak labor market, a 50 basis point cut, similar to October’s move, seems likely. These expectations could add further downside pressure to the Kiwi in the coming days.
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