NZD/USD clings to near 0.5950, Business NZ PSI falls back into contraction
|- NZD/USD rebounds from five-month lows despite hawkish tone surrounding the Fed.
- Business NZ PSI decreased to 47.5 for March, from the previous reading of 52.6.
- Fed Kansas President Lorie K. Logan will speak in a panel discussion at the BoJ-IMF conference on Monday.
NZD/USD rebounds from a five-month low of 0.5927 reached on Monday, hovering around 0.5950 during the Asian trading hours. The New Zealand Dollar (NZD) might have faced a struggle as New Zealand’s services sector fell back into contraction during March. Business NZ Performance of Services Index (PSI) report posted a reading of 47.5 for March, as compared to 52.6 prior.
According to BNZ’s Senior Economist Doug Steel, when today’s weak PSI activity is combined with last week’s similarly weak PMI activity, the composite reading suggests that GDP could decline by more than 2% compared to year-earlier levels. This projection is significantly weaker than what most analysts are forecasting.
Furthermore, market participants will likely closely observe a slew of key data from top trading partner China on Tuesday, including Q1 Gross Domestic Product (GDP) readings and Retail Sales and Industrial Output for March. Traders will shift their focus to the release of New Zealand’s Consumer Price Index (CPI) data on Wednesday.
On the other side, the Federal Reserve (Fed) seems to reevaluate its monetary easing plans due to ongoing US inflation and robust macroeconomic indicators. Core US Producer Price Index (PPI) report showed on Thursday, an increase of 2.4% YoY in March. The market was expecting a rise to 2.3% from 2.1% prior.
Market participants are expected to closely watch the US Retail Sales figures due to be released on Monday. Additionally, Federal Reserve Bank of Kansas President Lorie K. Logan will participate in a panel discussion at the BoJ-IMF conference on Monday.
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