Ella 
On Wednesday, the U.S. dollar weakened slightly, with NZD/USD attracting follow-up buying for the third consecutive day and climbing to more than a week’s high near 0.5900 in Asia.
The U.S. Purchasing Managers Index (PMI) released on Tuesday was weak, indicating that the economic upward momentum was weakening at the beginning of the second quarter. In addition, the easing of geopolitical tensions in the Middle East still supports the generally positive tone in the stock market and suppresses the safe-haven currency US dollar, which in turn is beneficial to the risk asset New Zealand dollar. That said, a hawkish outlook from the Fed could help limit the dollar’s downside and weigh on NZD/USD.
Market participants now appear to believe the Fed is unlikely to start a rate-cutting cycle in June, and their expectations for the total number of rate cuts in 2024 have shrunk to less than two, or about 40 basis points. At the same time, the hawkish outlook remains supportive of rising U.S. Treasury yields and could become a “boost” for the dollar. Therefore, this may inhibit traders from placing aggressive bullish bets on NZD/USD and limit the upside for NZD/USD.
Investors are now looking to U.S. durable goods orders due later in the U.S. session to provide some boost. However, market focus will still be on the preliminary US first-quarter gross domestic product (GDP) and the US personal consumption expenditures (PCE) price index, which will be released on Thursday and Friday respectively. This will affect market expectations for future policy decisions by the Federal Reserve, thereby driving demand for US dollars and helping to determine the near-term trend of NZD/USD.
