NZDUSD Fundamental Analysis – 5-June-2024

The New Zealand dollar stabilized at around $0.618 (NZD/USD), while the US dollar faced challenges. This shift stems from speculation that the Federal Reserve may start reducing interest rates in September.

This expectation follows a series of weak US economic data, notably highlighted by the JOLTS report, which showed US job openings fell significantly in April to their lowest level since February 2021. This suggests a continued cooling in the labor market, increasing the anticipation of rate cuts.

Crucial US Economic Data Releases Today

Investors are now closely watching several key economic indicators due for release. These include the US ADP Employment Change, the final S&P Global Services PMI, and the ISM Services PMI, all scheduled for today. Additionally, the jobs report on Friday is eagerly awaited for further insights into the labor market’s health.

New Zealand Market Bets on Rate Cut

In New Zealand, markets fully price in a quarter-point interest rate cut by November. However, the Reserve Bank of New Zealand has projected a steady policy until mid-2025, indicating a potential divergence between market expectations and official forecasts.

Summary

Traders are preparing for possible rate cuts from the European Central Bank (ECB) and the Bank of Canada this week. These global economic developments are crucial for investors to navigate the current financial landscape and make informed decisions.

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