NZD/USD remains under selling pressure near 0.6100 on the rally of US Dollar
- NZD/USD remains on the defensive around 0.6110 in Monday’s early Asian session.
- New Zealand’s Trade Balance arrived at NZD $-10.05B YoY in May from the previous reading of $-10.22B. A
- The RBNZ’s hawkish bias could limit the downside for the Kiwi.
The NZD/USD pair extends the downside near 0.6110 on Monday during the early Asian trading hours. New Zealand has been the weakest currency in this session amid the lack of catalysts. Meanwhile, the stronger US Dollar (USD) after the encouraging US Purchasing Managers Index (PMI) data might weigh on the NZD/USD for the time being.
Data released from Statistics New Zealand on Monday showed that New Zealand’s Trade Balance arrived at NZD $-10.05B YoY in May from the previous reading of $-10.22B. Additionally, Exports rose to $7.16B in the same month versus $6.31B prior whereas Imports increased to $6.95B in May compared to $6.32B in April.
The Reserve Bank of New Zealand (RBNZ) forecast during its last policy meeting in May that the central bank wouldn’t start cutting its Official Cash Rate from 5.5% until the third quarter of next year. Nonetheless, many analysts expect the beginning of the rate cut in early 2025
US business activity expanded in June at the fastest pace in more than two years, according to the S&P surveys released on Friday. The flash US S&P Composite PMI climbed to 54.6 in June from a final reading of 54.5 in May. The Manufacturing PMI rose to 51.7 in the same reported period from 51.3 in May and was stronger than the expected 51. The Services PMI improved to 55.1 in June from 54.8 prior, beating the estimation of 53.7. The Greenback gains ground after stronger US PMI data.
Meanwhile, Federal Reserve (Fed) officials remain cautious, emphasizing that the central bank needs to see more progress on inflation before considering a rate cut. The market continues to price in nearly 65% chance of a cut in September, according to CME FedWatch Tool. The higher-for-longer US rate narrative continues to underpin the US Dollar (USD) in the near term against the New Zealand Dollar (NZD).