NZD/USD rises to near 0.5850 ahead of Chinese PMI data

NZD/USD gains ground after two days of losses, trading around 0.5830 during the Asian hours on Thursday. The pair advances as the New Zealand Dollar (NZD) remains stronger following the latest domestic economic data releases. Market participants are also preparing for the upcoming Chinese Purchasing Managers’ Index (PMI) figures due later in the day, given the strong trade linkage between China and New Zealand and its influence on NZD sentiment.

ANZ New Zealand’s Business Confidence fell to -10.6 in April from 32.5 in March. Meanwhile, Activity Outlook came in at 19.6 against the previous reading of 39.3. Inflation expectations rose from 3.1% to 3.8%.

The Reserve Bank of New Zealand (RBNZ) is expected to maintain a cautious stance or potentially lean toward further tightening in order to steer inflation back to the 2% midpoint, as underlying price pressures remain persistent. Financial markets are increasingly pricing in the possibility of a rate hike in May after a robust first-quarter inflation reading, while inflationary pressures are anticipated to build further in Q2 as elevated energy costs continue to pass through the economy.

RBNZ Governor Anna Breman said on Wednesday that “first-quarter measures of core inflation have remained steady within the target range of 1–3%.” Breman added that “the Monetary Policy Committee is continuing to closely monitor developments in the Middle East alongside incoming economic data,” highlighting the bank’s data-dependent approach.

Meanwhile, the Federal Open Market Committee (FOMC) voted 8-4 on Wednesday to keep interest rates unchanged within the 3.5%–3.75% range, marking the first instance of four dissenting votes since October 1992. The committee emphasized that “inflation remains elevated, partly due to the recent rise in global energy prices.”

Federal Reserve (Fed) Chair Jerome Powell remarked during the post-meeting press conference that he intends to remain on the Board of Governors for an indefinite period even after his tenure as chair concludes. Meanwhile, Kevin Warsh, nominated by Donald Trump as his successor, is widely seen as positioned to assume leadership at the central bank.