The NZD/USD pair continued to decline as the market reacted to comments from the Minneapolis Fed President Neel Kashkari, who hinted that a rate hike might still be possible. This led to a risk aversion sentiment, causing the US Dollar to strengthen against the New Zealand Dollar. The US Dollar Index (DXY) also saw gains, trading higher around 104.70, supported by increases in US Treasury yields.
In addition to Kashkari’s comments, the mid-tier US Housing Price Index for March underperformed and came in at 0.1%, lower than the expected 0.5%. The market will be closely watching the release of the Fed’s Beige Book, which provides an overview of the US economic situation based on various sources.
On the Kiwi front, the ANZ Business Confidence Index fell to 11.2 in May, marking the lowest reading since September. This decline comes amid the Reserve Bank of New Zealand’s revision of its forecast, which raised the expected peak in interest rates and delayed the anticipated timing for a rate cut.
Traders will be paying close attention to the Yearly New Zealand Budget Release from the New Zealand Treasury on Thursday, as well as a speech by RBNZ Governor Adrian Orr scheduled for Friday. These events could have a significant impact on the NZD/USD pair and the overall market sentiment.
Overall, the market remains cautious as uncertainties linger regarding the potential for a rate hike in the US and the economic outlook for both the US and New Zealand. Traders should continue to monitor key economic indicators and central bank announcements for further insights into the direction of the NZD/USD pair.
