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In early European trading on Thursday, the New Zealand dollar rebounded to around 0.6090 against the US dollar during the consolidation of the US dollar. The pair’s upside may be limited as traders may turn cautious ahead of U.S. consumer price index (CPI) inflation data later on Thursday, last week’s jobless claims and a Fed speech.
Minutes of the Federal Reserve’s September 17-18 meeting showed that the “vast majority” of Federal Reserve (Fed) officials supported a period of loosening monetary policy and a substantial 50 basis points cut in interest rates. However, the broader consensus is that this initial step will not lock the U.S. central bank into any specific pace of future rate cuts. Rising expectations for a regular 25 basis point (bps) interest rate cut by the Federal Reserve in November have provided some support to the US dollar (USD).
U.S. inflation, measured by the Consumer Price Index (CPI), is expected to rise at an annual rate of 2.3% in September, down from a 2.5% increase in the previous month. Core CPI inflation, which excludes volatile food and energy prices, is expected to remain unchanged, with an annual rate expected to rise 3.2%.
The Reserve Bank of New Zealand (RBNZ) decided to cut the official cash rate (OCR) by 50 basis points (bps) from 5.25% to 4.75% at its October meeting on Wednesday, as widely expected. The New Zealand dollar lost traction as markets bet on more aggressive policy easing in November. Swaps suggest the RBNZ will ease a further 45 basis points at its November meeting.
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