NZD/USD extends its downside below 0.6020, US PPI data looms
- NZD/USD attracts some sellers around 0.6015 in Tuesday’s early European session.
- The Fed's Jefferson was the latest policymaker to call for holding rates at current levels until inflation shows more signs of easing.
- New Zealand’s two-year inflation expectations dropped from 2.50% in Q1 to 2.33% in Q2 of 2024.
The NZD/USD pair extends its downside near 0.6015 during the early European session on Tuesday. The downtick of the pair is backed by the stronger US Dollar (USD) broadly. Traders turn to a cautious mood ahead of the US Producer Price Index (PPI) for April and Federal Reserve (Fed) Chair Jerome Powell's speech later in the day.
Fed policymakers emphasized the need to hold the rate for longer amid stubborn inflation in the US. On Monday, Fed Vice Chair Philip Jefferson called for holding rates at current levels until inflation shows more signs of easing, and he will monitor more evidence to make sure that inflation is going to return to the 2% target.
Meanwhile, San Francisco Fed President Mary Daly highlighted the need for prolonged restrictive policy to achieve the Fed's inflation targets. Minneapolis Fed Neel Kashkari noted that he is in “wait and see mode” about future monetary policy. These hawkish remarks have boosted the Greenback broadly and created a headwind for the NZD/USD pair.
On the Kiwi front, the Reserve Bank of New Zealand (RBNZ) showed on Monday that New Zealand’s two-year inflation expectations dropped from 2.50% in Q1 2024 to 2.33% in Q2 of this year, while the average one-year inflation expectations eased to 2.73% in Q2 vs. 3.22% seen in the first quarter of 2024. The falling inflation expectations exert some selling pressure on the New Zealand Dollar (NZD).
Author
Lallalit Srijandorn
FXStreet
Lallalit Srijandorn is a Parisian at heart. She has lived in France since 2019 and now becomes a digital entrepreneur based in Paris and Bangkok.
