NZDUSD Fundamental Analysis – 24-June-2024

NZD/USD—The New Zealand dollar recently weakened to $0.610, mainly due to the strength of the US dollar. This shift came after robust US PMI (Purchasing Managers’ Index) reports raised concerns that the Federal Reserve may maintain higher interest rates for an extended period.

These reports indicated that US business activity grew fastest since April 2022, with the manufacturing and services sectors performing better than expected.

Investors Eye US PCE Data for Fed Clues

The Federal Reserve has taken a cautious stance, stating that more progress on inflation is needed before considering any rate cuts. This has led investors to closely monitor the upcoming US PCE (Personal Consumption Expenditures) inflation data, expected later this week, which could provide further insights into the Fed’s future actions.

New Zealand Delays Rate Cuts to 2025

Meanwhile, in New Zealand, the Reserve Bank has projected that it will not begin cutting interest rates until the third quarter of 2025, as stated in its last policy meeting in May. On the economic front, New Zealand recorded a trade surplus of NZD 204 million in May, significantly improving from the deficit of NZD 3 million in April.

This surplus was driven by a 2.9% increase in exports, outpacing a 0.6% rise in imports.

Summary

The interplay between US economic data and Federal Reserve policies influences the global currency market, impacting the New Zealand dollar’s value. This highlights the importance of investors staying informed about domestic and international economic developments.

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