During Thursday’s European session, the NZD/USD pair pulled back from its two-month highs, hovering around the 0.6190 mark. The resurgence of the US Dollar (USD) was fueled by elevated US Treasury yields. However, the prospect of a US Federal Reserve (Fed) interest rate cut in September, driven by mounting speculation, could curtail the Greenback’s gains and support the NZD/USD pair. Market participants are eagerly anticipating key US employment data releases on Friday, including Average Hourly Earnings and Nonfarm Payrolls.
On Wednesday, a mixed bag of economic indicators from the United States (US) contributed to speculations regarding a potential interest rate cut by the Fed. The ISM US Services PMI surged to 53.8 in May, marking its highest level in nine months and surpassing expectations of 50.8. Conversely, the ADP US Employment Change report revealed the addition of 152,000 new workers to payrolls in May, the lowest figure in four months and falling short of the forecast of 175,000, along with a downward revision of April’s figure to 188,000.
A Reuters poll conducted from May 31 to June 5 revealed that nearly two-thirds of economists now anticipate an interest rate cut in September. According to the CME FedWatch Tool, the probability of a Fed rate cut of at least 25 basis points in September has surged to almost 70.0%, up from 47.5% a week earlier.
In New Zealand, the Kiwi Dollar found support from upbeat data released by Caixin, indicating a rise in China’s Services PMI to 54.0 in May from 52.5 in April, surpassing market expectations of 52.6. However, investors are exercising caution ahead of Friday’s release of export and import data from China, New Zealand’s primary trading partner, for May.
Meanwhile, according to the NZ Herald on Wednesday, New Zealand’s Finance Minister Nicola Willis emphasized that the 2024 budget would not prolong higher interest rates, despite warnings from economists that it could complicate the Reserve Bank of New Zealand’s (RBNZ) efforts to curb inflation.
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