Ella 
In the Asian market on Monday, the NZD/USD is expected to continue its two consecutive gains last week and trade around 0.5960. However, NZD/USD found upside support as the greenback shed some of its intraday gains, which could be attributed to Friday’s drop in US bond yields.
However, the recent decline in U.S. bond yields has paused. As of press time, the 10-year U.S. bond yield rose to 4.45%, an increase of 0.32%.
The New Zealand economy appears to be more resilient than initially expected, with September New Zealand economic data underlining the need for further tightening of monetary policy. As a result, the market appears to be betting that the Reserve Bank of New Zealand (RBNZ) will raise the Official Cash Rate (OCR) before the end of 2023.
Economic data released last Friday showed that New Zealand’s annual trade deficit rose to NZ$15.54 billion in August from the previous value of NZ$158.8 billion. The Westpac Consumer Survey (Third Quarter) report showed a decline in the economic outlook, with the indicator falling to 80.2 from the previous value of 83.1.
On the other hand, U.S. business activity remained almost unchanged in September, S&P Global data showed. The S&P Global Manufacturing Purchasing Managers’ Index rose to 48.9 from 47.9 last month, exceeding the expected value of 48.0.
Meanwhile, the services PMI fell to 50.2 from 50.5 in July, versus expectations of 50.6. The composite PMI came in at 50.1, in line with expectations but weaker than the previous reading of 50.2.
The U.S. Dollar Index (DXY), which measures the greenback’s value against other major currencies, struggled to gain momentum. At press time, the U.S. Dollar Index was hovering around 105.50.
In addition, Boston Fed President Susan Collins said that further tightening policy may be introduced, but also emphasized the need to remain patient. In addition, Federal Reserve Governor Michelle W. Bowman also expressed a similar view, asserting that further interest rate increases are necessary to control inflation.
The Federal Reserve (Fed) has stressed the importance of keeping interest rates higher for an extended period of time in order to get inflation back to its target of 2%. The stance increased market expectations for at least another 25 basis points of interest rates before the end of the year.
