The NZD/USD pair climbed to around 0.5865 during Thursday’s Asian session, supported by a modest decline in the US Dollar (USD). Market participants remain cautious, however, as Federal Reserve (Fed) Chair Jerome Powell highlighted the strength of the US economy, signaling a measured approach to future interest rate cuts. Traders are now focused on the US weekly Initial Jobless Claims report, which precedes Friday’s key Nonfarm Payrolls (NFP) data.
While the US Fed is expected to reduce its benchmark interest rate further, recent concerns about inflationary pressures may limit the Kiwi’s upside. On the domestic front, dovish comments from Reserve Bank of New Zealand (RBNZ) Governor Adrian Orr and lackluster economic data weigh on the New Zealand Dollar (NZD). The prospect of a 25 basis points rate cut by the RBNZ in February 2025 has been priced in by nearly 68% of market participants, further dampening the Kiwi’s outlook.
Broader economic trends continue to influence the NZD, with China’s economic performance and global dairy prices playing a pivotal role. As traders await crucial US data, the Kiwi’s resilience will depend on developments in global risk sentiment and monetary policy shifts in both New Zealand and the United States.
