Ella 
NZD/USD continued its decline for a second day, trading around 0.6000 during the Asian session on Monday. After the Reserve Bank of New Zealand released its two-year inflation forecast (QoQ) for the second quarter, NZD/USD fell back, falling to 2.33% from 2.50% in the previous quarter. The decline added to speculation that the Reserve Bank of New Zealand may consider cutting interest rates later in 2024.
Additionally, NZD/USD came under pressure as the New Zealand Business Services Performance Index, a key measure of business activity in New Zealand’s services sector, fell to 47.1 in April, the lowest level since January 2022, released on Monday. The New Zealand Manufacturing Performance Index (PMI) released last Friday rose to 48.9 in April from 46.8 in March, but was still lower than 49.1 in February.
The U.S. Dollar Index (DXY), which measures the performance of the U.S. dollar (USD) against six major currencies, continued to strengthen as traders analyzed key U.S. (US) economic data on Friday and cautious remarks from Federal Reserve (FED) officials regarding potential interest rate adjustments. However, the recent pullback in U.S. Treasury yields could hamper the dollar’s upward momentum.
On Friday, the University of Michigan Consumer Sentiment Index fell to 67.4 in May from 77.2 in April, hitting a six-month low and below market expectations of 76. Meanwhile, the University of Michigan’s five-year consumer inflation forecast rose to 3.1% from 3.0% previously, a six-month high.
According to Reuters, Minneapolis Federal Reserve (Fed) President Neel Kashkari expressed concerns about the extent of monetary policy tightening. In an interview with CNBC on Friday, Kashkari acknowledged that while the bar for another rate hike is high, the possibility cannot be completely ruled out.
