Ella 
In early trading in Asia on Thursday, NZD/USD was trading strongly above the mid-range of 0.6100. A lower US dollar has provided some support for NZD/USD. U.S. retail sales data for February released on Thursday may provide some hints about the Federal Reserve’s (Fed) interest rate cut expectations next week. Retail sales are expected to rise 0.8% monthly in February. As of press time, NZD/USD was trading at 0.6158, up 0.02% on the day.
Rising headline and core inflation early this week could weigh on the Fed, which has cut interest rates only twice this year, and reduce the chances of the Fed easing policy in June. Investors have reduced the probability of a 25 basis point rate cut in June to 75% from 95% at the beginning of this week. The Fed is expected to hold its benchmark interest rate steady at a range of 5.25%-5.50% at its March policy meeting next week. The Fed wants to see more evidence that recent deflationary progress is sustainable before embarking on an easing process.
In terms of NZD/USD, the market is increasingly worried about China’s economic growth prospects, and the market is waiting to see the Chinese government’s measures to support the economy, which has suppressed demand for commodities, thus causing certain selling pressure on the New Zealand dollar acting as an agent for China, limiting the New Zealand dollar. /USD upside potential.
Later on Thursday, investors will keep a close eye on U.S. retail sales data for February. If the data is stronger than expected, it could boost the dollar’s performance against rival currencies. On Friday, New Zealand will release the New Zealand Business Manufacturing Index (PMI) for February. Next week, the Federal Open Market Committee monetary policy meeting will take center stage.
