NZD/USD tumbles to near 0.5900 ahead of RBNZ policy, US labor market data
- NZD/USD slips sharply to near 0.5900 as the RBNZ is expected to keep policy unchanged.
- The risk-off impulse remains intact as Fed policymakers see the US central bank as not done with hiking interest rates.
- US Manufacturing PMI improved but failed to capture the 50.0 threshold.
The NZD/USD pair drops vertically to near the round-level support of 0.5900 in the early New York session. The Kiwi asset faces selling pressure as the market mood is risk-off amid the inability of Asian economies to handle the consequences of higher interest rates from central bankers.
The S&P500 is expected to open on a bearish note, considering negative cues from overnight futures. US equities have been under pressure in the past few trading sessions as Federal Reserve (Fed) policymakers are supporting one more interest rate hike this year. Fed policymakers delivered hawkish guidance on interest rates on Monday as the resilient United States economy is expected to slow down progress in bringing down inflation to 2%.
Fed policymakers: Cleveland Fed Bank President Loretta Mester and Fed Governor Michelle Bowman supported a final interest rate increase by 25 basis points (bps) this year to 5.50-5.75% before announcing a pause.
Labor market conditions and consumer spending have remained robust in the US economy and now the manufacturing sector has en-routed on the path of recovery. On Monday, the US Institute of Supply Management (ISM) reported Manufacturing PMI for September at 49.0 against estimates of 47.7 and the August reading of 47.6. Although, the economic data failed to capture the 50.0 threshold but strong order book and robust wage growth could lead to further improvement ahead.
On the Kiwi front, investors await the interest rate decision from the Reserve Bank of New Zealand (RBNZ), which will be announced on Wednesday. The RBNZ is expected to keep the Official Cash Rate (OCR) unchanged at 5.5%.
Author
Sagar Dua
FXStreet
Sagar Dua is associated with the financial markets from his college days. Along with pursuing post-graduation in Commerce in 2014, he started his markets training with chart analysis.
