Ella 
In early Asian trading on Wednesday, NZD/USD rose. A pick-up in US dollar (USD) demand has put some selling pressure on NZD/USD. NZD/USD is currently trading around 0.6256, up 0.08% on the day.
At the December Fed meeting, the committee stated that it would cut interest rates three times in 2024, by 25 basis points each time. The CME FedWatch Tool shows that the market does not expect a rate hike at the January meeting and has priced the probability of a rate cut in March 2024 at more than 78%.
Minutes of the December Fed meeting due later on Wednesday will provide more information on policymakers’ views. Traders will also take more clues from U.S. labor force data. U.S. nonfarm payrolls are expected to add 168,000 jobs in December, compared with 199,000 in November, and the unemployment rate is expected to rise to 3.8%. If the non-agricultural data is stronger than expected, it will challenge market expectations for interest rate cuts and may push up the price of the US dollar against major currency pairs.
Economic events in New Zealand have been quieter this week. On Tuesday, China’s Caixin manufacturing purchasing managers’ index rose to 50.8 in December from 50.7 in November, better than expectations for 50.4. A favorable economic situation in China may support the NZD (a proxy for China) and become a tailwind for NZD/USD.
Looking ahead, market participants are waiting to see China’s Caixin Services Purchasing Managers’ Index for December. In addition, the final value of the U.S. ISM Manufacturing Purchasing Managers Index and the minutes of the Federal Reserve meeting will be released on Wednesday.
