NZD/USD pressured in a firmer US Dollar environment

• NZD/USD bulls pressured back as US Dollar rises.
• US Dollar firms on JPMorgan Chase's takeover of First Republic Bank.

NZD/USD has been trading in a sideways fashion to start the week in choppy holiday conditions. The pair travelled between a low of 0.6161 and 0.6200.

The focus was on US and Chinese data and the calming of US regional bank jitters in the wake of the sale of First Republic Bank. JPMorgan Chase's takeover of First Republic Bank, ahead of Wednesday's policy decision by the US Federal Reserve.  JPMorgan Chase has bought failed First Republic Bank's deposits and a "substantial amount of their assets and certain liabilities," JPMorgan Chase said in a press release Monday.

"Our government invited us and others to step up, and we did," JPMorgan Chase CEO Jamie Dimon said in a statement. "This acquisition modestly benefits our company overall, it is accretive to shareholders, it helps further advance our wealth strategy, and it is complementary to our existing franchise."

The US Dollar enjoyed the relief as well as ISM data surprised the upside and bond yields rose. Additionally, US construction spending increased more than expected in March. Weak economic data from China may have been a factor also with the manufacturing purchasing managers' index (PMI) declining to below contraction territory (50) with the data reading 49.2 from 51.9 in March for the world's second-biggest economy.

´´As we noted yesterday, this week is all about central banks globally and labour market data locally. And on that score, first cab off the rank is the RBA decision at 4.30pm NZT today,´´ analysts at ANZ Bank noted.

´´Almost nobody expects a hike, but many expect them in due course, and assuming we do see a pause, how the AUD (and by correlation, the NZD) react will depend on the RBA’s tone. NZ labour market data tomorrow may raise a few eyebrows for its strength, but it’s lagging data and FX markets may not give it the attention it deserves,´´ the analysts said. 

Meanwhile, investors also await the Federal Reserve decision. ´´We expect a 25bp rate hike at next week's FOMC meeting and anticipate that post-meeting communication will: (i) emphasize that disinflation has been evolving slower than expected, leaving open the possibility of additional tightening, and (ii) acknowledge the more uncertain economic environment, especially with regard to credit conditions post SVB collapse,´´ analysts at TD Securities said.