Following FOMC Minutes, NZD/USD Remains Limited Below the 0.6200 Barrier; Attention Turns to US PMI Data

The NZD/USD pair trades negative on Thursday morning in the early Asian session, below the 0.6200 barrier. As evidenced by the January FOMC Minutes, prior to reducing interest rates, policymakers will require more assurance that inflation will return to target in a sustainable manner. At present, NZD/USD is trading near 0.6177, a decrease of 0.05% on the day.

In Wednesday's FOMC minutes, it was stated that Federal Reserve (Fed) officials exhibited a lack of urgency in implementing interest rate reductions. The majority of participants stated that until the central bank had "greater confidence" that inflation was declining, no reductions would occur. Members of the Federal Reserve will evaluate hazards both to the upside and downside, and they are concerned that rates could be lowered too rapidly. The initial rate reduction has been postponed from the March meeting to the June meeting, and the number of anticipated rate cuts in 2024 has been reduced from six to four.  

Regarding New Zealand, Statistics New Zealand disclosed on Wednesday that the annualized Trade Balance for the country contracted to -12.5 billion YoY in January, down from the previous estimate of -13.62 billion YoY (which was revised from -13.57 billion). In contrast, imports decreased from $6.22 billion to $5.91 billion. The value of exports decreased from 5.85 billion the previous month to 4.93 billion.

Investors will closely monitor the forthcoming US S&P Global PMI data, as well as the customary weekly US Initial Jobless Claims, Existing Home Sales, and Chicago Fed National Activity Index. Cook, Kashkari, Jefferson, and Harker of the FOMC are all scheduled to deliver statements later today. The New Zealand Retail Sales report for the fourth quarter (Q4) is scheduled to be released on Friday.