NZD/USD surges to near 0.6140 after upbeat Business NZ PSI, US Dollar remains stable
- NZD/USD continues to move in a positive direction amid a stable US Dollar.
- New Zealand Dollar gains ground on the stronger Business NZ PSI.
- RBNZ Governor Adrian Orr mentioned that the RBNZ has more to do to anchor inflation expectations to the 2.0% target.
NZD/USD extends its winning streak that began on Wednesday with edging higher around 0.6140 during the European hours on Monday. The New Zealand Dollar (NZD) moves higher on the back of the upbeat Business NZ Performance of Services Index (PSI) released on Monday.
The Business NZ PSI data is derived from surveys of senior executives at private-sector companies, reflecting an expansion in the service sector with an improved reading of 52.1 in January, as compared to the previous reading of 48.8. On Friday, Business NZ PMI was released and showed an improved reading of 47.3, higher than the previous 43.4 reading.
Reserve Bank of New Zealand (RBNZ) Governor Adrian Orr gave a speech titled "The Monetary Policy Remit and 2.0% Inflation" at the New Zealand Economics Forum in Hamilton on Friday. Orr emphasized that the RBNZ has additional tasks to accomplish to anchor inflation expectations to the 2.0% target. He notably declined to discuss rate targets.
Orr emphasized that bringing core inflation within the 1-2% target range is crucial for achieving the overall inflation target. He reaffirmed that the 2.0% inflation midpoint target remains appropriate.
However, market sentiment indicates of no rate adjustments in the upcoming Federal Reserve meetings in March and May. According to the CME FedWatch Tool, there is approximately a 52% probability of a 25 basis points (bps) rate cut in June. On Friday, the US Dollar (USD) failed to sustain its gains, which were initially fueled by better-than-expected Producer Price Index (PPI) data from the United States, consequently leading to an increase in the NZD/USD pair.
The US Producer Price Index (PPI) grew by 0.9% YoY, against the expectations of 0.6% and the 1.0% prior growth. Additionally, there was a MoM improvement of 0.3%, swinging from the previous 0.1% decline. However, the preliminary Michigan Consumer Sentiment Index rose to 79.6 from the previous 79.0, yet it fell short of the anticipated reading of 80.0.
Author
Akhtar Faruqui
FXStreet
Akhtar Faruqui is a Forex Analyst based in New Delhi, India. With a keen eye for market trends and a passion for dissecting complex financial dynamics, he is dedicated to delivering accurate and insightful Forex news and analysis.
