Anna 
The NZD/USD pair continues its upward trajectory, reaching 0.6160 in the early European session on Wednesday. The Kiwi asset is buoyed by an improved market sentiment, driving demand for risk-associated assets.
S&P 500 futures have seen modest gains during the early London session, contributing to the positive environment. The US Dollar Index (DXY) remains relatively stable, just below 103.00. Meanwhile, 10-year US Treasury yields have decreased to 4.14%. However, there is potential pressure on risk-sensitive assets as expectations for the Federal Reserve (Fed) cutting interest rates in the June policy meeting have significantly diminished.
The CME FedWatch tool reports a 34% probability that the Fed will maintain interest rates within the 5.25%-5.50% range in June. This represents an increase from Tuesday’s 28% chance following the release of Consumer Price Index (CPI) data for February, which exceeded expectations.
Fed policymakers appear inclined to keep interest rates elevated for an extended period, awaiting substantial evidence that inflation will consistently return to the 2% target.
Looking ahead, investor attention will shift to the United States Producer Price Index (PPI) and Retail Sales data scheduled for release on Thursday.
On the New Zealand Dollar front, there is an expectation of easing inflation, providing some relief for households. The latest forecasts from the Reserve Bank of New Zealand (RBNZ) indicate a projected 0.8% rise in consumer prices for the quarter ending March. The annual inflation rate is anticipated to decrease to 4.2%, down from 4.7% in the last quarter of 2023.
