The NZD/USD currency pair traded little changed on Tuesday, after pulling back from a 5-week high of 0.6218, ahead of the outcome of the RBNZ’s policy meeting on February 28th.
Market players will also pay attention to several key US macro data prints later this week, which may provide fresh clues regarding the timing of the Federal Reserve’s first rate cut.
The Reserve Bank of New Zealand is largely expected to keep its official cash rate without change at 5.5% at its February policy meeting, which would extend the rate pause for the fifth straight gathering.
In November, the RBNZ Committee had expressed concerns over ongoing excess demand and cost pressures amid high core inflation.
RBNZ policy makers had agreed that interest rates would have to remain at a restrictive level for some time in order to drive inflation back down to the target range of 1%-3% and support sustainable employment.
In terms of macro data, market players are now expecting the second estimate of US GDP growth for Q4 due out on Wednesday.
The US economy grew at an annualized rate of 3.3% in the fourth quarter of 2023, a preliminary estimate showed, which far outpaced market consensus.
Additionally, the Federal Reserve’s preferred measure of inflation, the personal consumption expenditures price index data for January will be released on Thursday.
The Core PCE Price Index probably rose 2.8% YoY in January, according to market estimates, after a 2.9% surge in December.
On a month-over-month basis, the Core PCE Price Index is expected to have risen 0.4% in January.
Investor expectations of a Fed rate cut have recently been pushed back from May to June, CME’s FedWatch Tool showed.
Currency Pair Performance
As of 9:51 GMT on Tuesday the NZD/USD currency pair was edging down 0.10% to trade at 0.6166.
Last week, the Forex pair went up as high as 0.6218. The latter has been the pair’s strongest level since January 15th (0.6242).