Ella 
Although the U.S. dollar strengthened in early Asian trading on Tuesday, NZD/USD remained above the psychological 0.6100 mark. The New Zealand dollar rose on the positive news. However, traders may turn cautious ahead of Wednesday’s January meeting of the Federal Open Market Committee (FOMC). The pair retreated from the session high of 0.6143. As of press time, NZD/USD was trading at 0.6132, down 0.01% on the day.
U.S. inflation is continuing to fall, approaching the Federal Reserve’s target, and the U.S. economy remains strong. Most economists expect the Fed’s first rate cut to come in May or June, but a cut at the Fed’s March meeting is not out of the question. The timing of a rate cut will almost certainly be a closely watched topic at the Fed’s two-day meeting that ends on Wednesday. The Fed is expected to keep its key interest rate unchanged at 5.25-5.50% at its January meeting. On Monday, the U.S. Dallas Fed Manufacturing Business Index for January recorded -27.4, compared with the previous reading of -10.4.
On the other hand, New Zealand Reserve Bank Chief Economist Paul Conway said on Tuesday that recent economic data shows that monetary policy is working, but there is still some way to go before inflation returns to the mid-2% point.
Ahead of key events, Tuesday will see the release of U.S. JOLTS job openings and the Conference Board consumer confidence index. The Federal Reserve’s interest rate decision will be announced on Thursday. The changes in wording in the Fed’s statement after its monetary policy meeting will be the focus of market attention.
