Ella 
In early trading in Asia on Wednesday, NZD/USD was hovering near the 0.6100 mark. NZD/USD was briefly higher overnight before falling back as the U.S. dollar strengthened. Meanwhile, the U.S. dollar index hit a new annual high above 103.00 as the market turned cautious ahead of the release of key U.S. economic data. As of press time, NZD/USD was trading at 0.6100, with an intraday increase of 0.20%.
On Tuesday, the U.S. Richmond Fed manufacturing index for January fell below expectations, falling to -15 from -11, marking the third consecutive month of negative readings. The index is below the expected value of -7.
Federal Reserve (Fed) officials stressed that the central bank should cut interest rates “methodically and cautiously.” The market expects the Fed to cut interest rates more slowly and less forcefully than previously expected. The odds of a Fed rate cut in March fell to 44.3% from 81% last week, according to the CME FedWatch tool.
In NZD/USD, Statistics New Zealand data showed that the quarterly rate of New Zealand’s consumer price index in the fourth quarter of 2023 was 0.5%, down from 1.8% in the previous quarter, in line with market expectations. Inflation was at an annual rate of 4.7%, compared with 5.6% in the previous month. Following the above data, the NZD gained momentum above the psychological 0.6100 mark.
Market participants will pay close attention to the preliminary US S&P Global Purchasing Managers Index report released on Wednesday. Later this week, U.S. December GDP annualized (Q4) and core personal consumption expenditures price index (core PCE) will be in focus.
