Ella 
In early trading in Asia on Tuesday, trading in the New Zealand dollar/US dollar was flat, near the 0.6000 mark. The U.S. dollar index retreated from recent highs and remains above the 104.00 mark. Investors are awaiting U.S. personal consumption expenditures price index (PCE) data for February, which could provide some signal on underlying momentum in inflation.
On Monday, U.S. new home sales fell 0.3% in February from a 1.7% increase in January, below expectations of 2.3%. Meanwhile, the Dallas Fed manufacturing survey fell to -14.4 in March from -11.3 previously. Friday’s US PCE price index will be in focus. The headline PCE price index is expected to increase at a monthly rate of 0.4% and the core PCE price index at a monthly rate of 0.3%.
Fed policymakers have said they will be able to cut interest rates when they are confident that inflation is heading toward their 2.0% target. Investors expect that upcoming data will rule out the possibility of a rate cut in May, with the first rate cut in June. Fed funds futures prices indicate a 74.5% chance the Fed will cut interest rates in June, according to the CME FedWatch tool.
On the other hand, New Zealand’s economy entered a technical recession in the final quarter of 2024, affected by weakness in consumer spending and wholesale trade. This in turn suppresses the NZD/USD, which is negative for the NZD/USD. In addition, lower-than-expected GDP may persuade the Reserve Bank of New Zealand to cut the official cash rate (OCR) early.
