Ella 
In early Asian trading on Wednesday, the New Zealand dollar/US dollar rose slightly, falling below the psychological mark of 0.6100. NZD/USD has been provided some support by falling US dollar (USD) and US Treasury yields following weak ISM services sector data. Focus turns to Federal Reserve Chairman Jerome Powell’s first testimony, followed by changes in U.S. ADP employment numbers due later on Wednesday. As of press time, the New Zealand dollar/US dollar was trading at 0.6085, with an intraday increase of 0.02%.
On Tuesday, the U.S. ISM services purchasing managers’ index fell to 52.6 in February from 53.4 in January, below expectations of 53.0. The new orders index rose to 56.1 from the previous reading of 55.0. The employment index fell to 48.0 from the previous reading of 50.5, and the price paid index fell to 58.6 from the previous reading of 64.0.
Federal Reserve Chairman Jerome Powell’s testimony before the Senate Banking Committee on Wednesday will be in focus. Investors believe that Fed Chairman Jerome Powell will be hawkish and stressed that more data is needed to strengthen confidence in cutting interest rates. Hawkish comments from Fed officials are likely to boost the US dollar and weigh on NZD/USD.
In NZD/USD, New Zealand Reserve Bank chief economist Paul Conway said on Wednesday that falling inflation was encouraging and that interest rates would need to remain restrictive for some time. Last week, the Reserve Bank of New Zealand decided to keep its policy rate unchanged at 5.50% at its fifth consecutive meeting. Reserve Bank of New Zealand Governor Adrian Orr reiterated at a press conference that the central bank is concerned about underlying inflation and how inflationary growth is moderating. Orr further pointed out that the official cash rate (OCR) needs to be “sustained” in a restrictive range to ensure that inflation returns to the 1-3% target.
