Ella 
In early Asian trading on Friday, the New Zealand dollar/US dollar fluctuated and weakened above the 0.6100 mark. US gross domestic product (GDP) growth provided some support to the US dollar (USD) and weighed on NZD/USD. Investors will take more clues from Friday’s release of the U.S. core personal consumption expenditures price index (Core PCE) for fresh impetus. The incident could trigger market volatility. As of press time, NZD/USD was trading at 0.6109, down 0.03% throughout the day.
U.S. gross domestic product grew at a 3.1% quarterly rate in the fourth quarter, better than the previous reading of 4.9%. The U.S. dollar (USD) surged higher as strong GDP boosted expectations of a soft landing for the economy. Meanwhile, U.S. initial jobless claims rose to 214,000 in the week ended January 20, the highest level in a month. Continuing claims for unemployment benefits increased by 27,000 in the week ended January 13, to 1.833 million. Markets have increased the probability that the Federal Reserve will cut interest rates by a quarter percentage point at its March meeting to 51% from 41% on Wednesday.
New Zealand’s fourth-quarter inflation was in line with expectations and hit its lowest level since mid-2021. However, inflation remains higher than the central bank is comfortable with, and the market does not expect the Reserve Bank of New Zealand to cut interest rates in the short term.
Looking ahead, market participants will keep a close eye on the Fed’s preferred inflation measure, the core personal consumption expenditures price index (Core PCE), which is due to be released on Friday. The core PCE price index is estimated to have risen 0.2% monthly and 3.0% annually.
