The NZD/USD pair is gaining momentum, reaching a high of 0.6160 amid a weakened US Dollar following the US PCE Inflation report for April. The report showed that price pressures increased as expected, with monthly and annual headline inflation growing by 0.3% and 2.7% respectively. Although core PCE inflation rose by 0.2% on a monthly basis, slower than estimates, it still increased by 2.8% annually.
The stubbornly elevated PCE inflation makes it unlikely for the Fed to cut interest rates at the September meeting, which is generally positive for the US Dollar. However, the currency is currently under pressure due to downwardly revised US Q1 GDP data, showing a slower pace of economic expansion at 1.3%.
As a result, the US Dollar Index (DXY) is down more than 0.3% around 104.40. Investors are now turning their attention to upcoming data releases, including the Manufacturing and Services PMI from the Institute of Supply Management (ISM) and the Nonfarm Payrolls (NFP) report for May.
Despite China’s Manufacturing and Non-Manufacturing PMI for May missing estimates, the New Zealand Dollar remains strong. The currency is often seen as a proxy for China’s economic prospects, but its resilience in the face of disappointing data shows its strength.
Overall, the NZD/USD pair’s upward momentum is driven by a weaker US Dollar, coupled with strong economic data from New Zealand. With a focus on upcoming data releases, investors will be closely monitoring how these reports could potentially impact the currency pair in the coming days.
