NZD/USD gains ground above 0.6060 ahead of RBNZ rate decision, US CPI data
- NZD/USD edges higher to 0.6065 in Wednesday’s early Asian session.
- RBNZ will announce its monetary policy decision on Wednesday, with no change in rates expected as inflation remains too high.
- The recent US employment report raises speculation that the Fed might delay the easing cycle.
The NZD/USD pair trades in positive territory for the third consecutive day near 0.6065 during the early Asian section on Wednesday. Market players will closely watch the Reserve Bank of New Zealand (RBNZ) interest rate decision on Wednesday. Later in the day, the US March Consumer Price Index (CPI) inflation figures and the FOMC Minutes will be in the spotlight.
The RBNZ is widely expected to maintain the Official Cash Rate (OCR) at 5.50% for the sixth meeting in a row. As a rate-on-hold decision is fully priced in, markets will monitor the tone of the New Zealand central bank and the timing of rate cuts. High inflation is a major factor in why the RBNZ is cautious of signals that rate cuts are imminent. Analysts believe the RBNZ would rather wait for the Federal Reserve (Fed) to cut rates first. This, in turn, might boost the New Zealand Dollar and create a tailwind for the NZD/USD pair.
On the USD’s front, the recent US employment report last week indicated the US economy added more jobs than expected, prompting speculation that the Fed might delay the easing cycle. Fed Chair Jerome Powell said that the US central bank could cut rates if the US economy continued on its current course, while adding that the main factor in the central bank's rate-cutting decision is when or whether inflation will return to the Fed’s 2% target. After the RBNZ monetary policy meeting, attention will shift to the US CPI inflation data and the FOMC Minutes, which might offer some insights about the further inflation and interest rate outlook.