NZD/USD faces tough hurdles above 0.6180 ahead of US ISM PMI and Fed policy

• NZD/USD has slipped after failing to sustain above 0.6180 as the USD Index has shown recovery.
• Mild losses in the S&P500 futures could be short-lived as JP Morgan and PNC are submitting a final bid for First Republic Bank.
• Consistent US consumer spending and a jump in the labor cost index have advocated for further rate hikes from the Fed.

The NZD/USD pair has failed to sustain above the crucial resistance of 0.6180 in the early Asian session. The Kiwi asset has sensed selling interest as investors are getting anxious ahead of the mega event of the Federal Reserve’s (Fed) interest rate policy.

S&P500 futures are facing nominal losses in early Asia as pre-Fed policy anxiety has kicked in. However, the 500-US stocks basket was heavily bought on Friday, indicating a caution amid a cheerful market mood. Mild losses in the S&P500 futures could be short-lived as JP Morgan and PNC are submitting final bid for First Republic Bank in Federal Deposit Insurance Corporation (FDIC) auction, which might infuse some confidence in investors as it would ease United States banking jitters.

The US Dollar Index (DXY) has extended its recovery above 101.70 as a consecutive 25 basis point (bp) interest rate hike announcement from Fed chair Jerome Powell is highly likely. Consistent consumer spending and a jump in labor cost index data released on Friday have advocated for further interest rate hikes from the Fed.

The US core Personal Consumption Expenditure (PCE) Price Index remained steady in March at 0.3% as expected by the market participants. The Employment Cost Index (Q1) rose to 1.2% from the consensus and the prior release of 1.1%.

On Monday, US ISM Manufacturing PMI (April) will be keenly watched. Investors are anticipating mild gains in PMI figures to 46.6 vs. the prior release of 46.3. New Orders Index data that indicates forward demand is expected to jump to 45.5 from the former release of 44.3.

On the New Zealand dollar front, investors will keenly await the release of NZ employment (Q1) data. Employment Change is expected to remain steady at 0.2%. While the Unemployment Rate is seen rising to 3.5% from the former release of 3.4%. The quarterly Employment Cost Index is seen unchanged at 1.1%. Fewer job additions and higher jobless rates would allow the Reserve Bank of New Zealand (RBNZ) to consider a pause in the policy-tightening process.