NZD/USD gathers strength above the 0.6100 mark, Michigan sentiment data looms
19.01.2024, 00:04

NZD/USD gathers strength above the 0.6100 mark, Michigan sentiment data looms

  • NZD/USD gains ground near 0.6120, adding 0.13% for the day.
  • US Initial Jobless Claims reached their lowest level since September 2022.
  • New Zealand’s Business NZ PMI eased to 43.1 in December from November's 46.7.

The NZD/USD pair trades on a positive note during the early Asian session on Friday. The pair finds support near the 100-day Exponential Moving Average (EMA) at 0.6115 and currently trades around 0.6120. The New Zealand Consumer Price Index (CPI) next week will be a closely watched event and could offer hints about further monetary policy updates from the Reserve Bank of New Zealand (RBNZ). 

The Labor Department revealed on Thursday that US Initial Jobless Claims reached their lowest level since September 2022. The Initial claims for state unemployment benefits dropped to 187,000 for the week ended January 13 from 203,000 in the previous reading. The total for continuing claims hit 1.806 million, better than the 1.845 million estimated. 

The upbeat data could make it difficult for the Federal Reserve (Fed) to begin cutting interest rates in March. Investors have lowered their bets for a rate cut at the March meeting to below 60%, according to CME Group's FedWatch Tool.

On the Kiwi front, the markets expect the RBNZ to begin its easing cycle in August 2024, taking the OCR to 3.5% over 12 months. Traders will take more cues from the New Zealand inflation data next week. The Q4 headline CPI is expected to decelerate sharply from 5.6% to 4.7% YoY (0.6% QoQ). 

The latest data from Business NZ showed that New Zealand’s Performance of Manufacturing Index (PMI) eased to 43.1 in December from November's 46.7. The figure registered the ninth consecutive month of contraction in manufacturing activity in New Zealand.

Looking ahead, market players will monitor the preliminary US Michigan Consumer Sentiment Index for January and Existing Home Sales. Later in the day, FOMC members M. Daly (San Francisco) and M. Barr (Board of Governors) are scheduled to deliver speeches. These data could give a clear direction to the NZD/USD pair.

 

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