NZD/USD Remains Stable in the Mid-0.6100s Prior to the PBoC Rate Decision
The NZD/USD pair trades on a neutral note near 0.6148 in the early Asian session on Tuesday. As a result of the optimistic inflation data, Fed policymakers have adopted a more prudent approach toward interest rate cuts this year. Orr of the RBNZ stated that the central bank must maintain its efforts to restrain inflation expectations, which suggests that a rate cut is not imminent.

The NZD/USD pair maintains a neutral trading session early Tuesday morning in Asia. The market engages in subdued trading following a US holiday. Tuesday, the People's Bank of China (PBoC) will declare its interest rate decision. In the interim, resistance to anticipated rate cuts by the Federal Reserve (Fed) could strengthen the Greenback and limit the pair's upside. The NZD/USD is trading at 0.6148 at the time of writing, a daily loss of 0.02%.
Inflation data that is more robust than anticipated has prompted Fed policymakers to intensify their cautious stance regarding interest rate reductions for the current year. Wednesday, investors will rely more heavily on the FOMC Minutes. 75% is the probability that the markets have priced in a rate reduction by the Federal Reserve in June, per the CME's FedWatch Tool.
Regarding New Zealand, Governor Adrian Orr of the Reserve Bank of New Zealand (RBNZ) stated last week that the central bank must continue to contain inflation expectations, implying that it will not soon signal a shift toward interest rate cuts. As a result, the New Zealand Dollar (NZD) has experienced a preceding session-long increase, providing a tailwind for the NZD/USD pair. In the first quarter, inflation expectations for the next two years fell to their lowest level in two and a half years, at 2.5%. The RBNZ anticipates that inflation will recover to 2% within three years, although this time frame is also contingent on the bank's tolerance for the effects of temporary inflation disruptions.
Market participants will anticipate the PBoC's interest rate decision. Wednesday will see the release of the New Zealand Q4 Producer Price Index (PPI), and Fed's Bostic is scheduled to speak. Wednesday's release of the FOMC Minutes will be the focal point of this week. This event could provide the NZD/USD pair with a distinct direction and trading opportunities.
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