Ella 
During early European trading on Tuesday, NZD/USD extended its losses near 0.6015. The pair’s downside was mainly supported by a stronger US dollar. Sentiment turned cautious ahead of the U.S. Producer Price Index (PPI) for April and a speech later by Federal Reserve Chairman Powell.
Federal Reserve policymakers have stressed the need to keep interest rates on hold for longer amid stubbornly high U.S. inflation. On Monday, Fed Vice Chairman Philip Jefferson called for keeping interest rates at current levels until inflation shows more signs of easing, and he will monitor more evidence to ensure that inflation will return to the 2% target.
Meanwhile, San Francisco Fed President Mary Daly emphasized the need for long-term restrictive policies to achieve the Fed’s inflation target. Minneapolis Fed Neel Kashkari noted that monetary policy is in “wait and see mode” regarding the future. These hawkish comments broadly boosted the US dollar and weighed on NZD/USD.
In terms of the New Zealand dollar, data released by the Reserve Bank of New Zealand (RBNZ) on Monday showed that New Zealand’s two-year inflation expectation fell from 2.50% in the first quarter of 2024 to 2.33% in the second quarter of this year, while the one-year average inflation expectation dropped from 2.50% in the first quarter of 2024 to 2.33% in the second quarter of this year. 3.22% in the first quarter of 2024 dropped to 2.73% in the second quarter. Falling inflation expectations have put some selling pressure on NZD/USD.
