Ella 
In early Asian trading on Wednesday, NZD/USD pared its gains but was still above 0.6100. Stronger-than-expected labor market data could convince the Federal Reserve to delay its planned interest rate cuts this year, which would create headwinds for the dollar’s downside. Investors will be closely watching the Federal Reserve’s decision later on Wednesday, with no changes to interest rate policy expected. As of press time, the New Zealand dollar/US dollar was trading at 0.6135, up 0.02% throughout the day.
Data released by the U.S. Bureau of Labor Statistics on Tuesday showed that the number of job openings in the United States rose to 9.026 million in December, up from 8.925 million in November. Meanwhile, the Conference Board’s consumer confidence index surged to a two-year high in January, with the gauge recording 114.8 in January compared with 108.0 previously. Both reports failed to boost the dollar as traders preferred to stay on the sidelines ahead of the Fed meeting.
The Fed is expected to keep monetary conditions unchanged. Markets will be watching for hints from Chairman Jerome Powell on the timing of a rate cut during his press conference. If Powell releases dovish remarks, it may put some selling pressure on the US dollar and be negative for NZD/USD.
In NZD/USD, the Reserve Bank of New Zealand chief economist Paul Conway maintained a hawkish stance and pushed back expectations for an interest rate cut. Conway said Tuesday that recent economic data suggests monetary policy is working as the economy slows and inflation eases. However, there is still some way to go before achieving the midpoint of the 2% inflation target.
The U.S. ADP payroll change for January will be released on Wednesday ahead of the Fed’s interest rate decision and press conference. On Friday, market focus will turn to U.S. employment data, including non-farm payrolls and the unemployment rate.
