- NZD/USD falls sharply to 0.6060 as the US Dollar sees a sharp recovery.
- The S&P Global reports that preliminary Manufacturing PMI surprisingly rose to 52.5 in March.
- The Q4 NZ GDP shows that the economy was in a technical recession in the second half of 2023.
The NZD/USD pair surrenders its intraday gains and turns negative in the early New York session on Thursday. The Kiwi asset falls back as the US Dollar rebounds sharply from its five-day low of 0.6060. The US Dollar Index (DXY) rises strongly to 103.76 as the Federal Reserve (Fed) has revised United States Gross Domestic Product (GDP) forecasts higher for 2024.
Fed’s latest economic projections indicate that the US economy will grow by 2.1% in 2024, upwardly revised from December’s projections of 1.4%. An upbeat economic outlook bodes well for the domestic currency.
Meanwhile, the S&P Global has reported mixed preliminary PMI data for March. The agency shows that the Manufacturing PMI surprisingly rose to 52.5 from the former reading of 52.2. Investors anticipated the factory PMI to decline to 51.7. The Services PMI that represents the service sector, which accounts for two-thirds of the economy, falls at a higher pace to 51.7 from expectations of 52.0 and the former reading of 52.3.
The appeal for risk-perceived assets has weakened despite firm market expectations for the Fed to reduce interest rates after the June policy meeting. The CME FedWatch tool shows that there is a little over 74% chance that a rate cut will be announced in June, which is significantly up from the 59% recorded before the Fed’s meeting.
On the Kiwi front, Statz NZ has reported that the economy was in a technical recession in the second half of 2023. The Q4 Gross Domestic Product (GDP) for 2023 surprisingly contracted by 0.1%, while investors projected the economy to have grown at a similar pace. In the third quarter of 2023, the NZ economy also contracted by 0.3%. A weak NZ economic outlook could force the Reserve Bank of New Zealand (RBNZ) to consider early rate cuts.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD edges lower toward 1.0700 post-US PCE
EUR/USD stays under modest bearish pressure but manages to hold above 1.0700 in the American session on Friday. The US Dollar (USD) gathers strength against its rivals after the stronger-than-forecast PCE inflation data, not allowing the pair to gain traction.
GBP/USD retreats to 1.2500 on renewed USD strength
GBP/USD lost its traction and turned negative on the day near 1.2500. Following the stronger-than-expected PCE inflation readings from the US, the USD stays resilient and makes it difficult for the pair to gather recovery momentum.
Gold struggles to hold above $2,350 following US inflation
Gold turned south and declined toward $2,340, erasing a large portion of its daily gains, as the USD benefited from PCE inflation data. The benchmark 10-year US yield, however, stays in negative territory and helps XAU/USD limit its losses.
Bitcoin Weekly Forecast: BTC’s next breakout could propel it to $80,000 Premium
Bitcoin’s recent price consolidation could be nearing its end as technical indicators and on-chain metrics suggest a potential upward breakout. However, this move would not be straightforward and could punish impatient investors.
Week ahead – Hawkish risk as Fed and NFP on tap, Eurozone data eyed too
Fed meets on Wednesday as US inflation stays elevated. Will Friday’s jobs report bring relief or more angst for the markets? Eurozone flash GDP and CPI numbers in focus for the Euro.