NZD/USD finds support above the 0.6100 mark, eyes on US PMI data

  • NZD/USD trades in negative territory for the second consecutive day near 0.6115. 
  • The FOMC kept the target range for the Federal Funds Rate unchanged at 5.25–5.50%, as widely expected. 
  • The markets anticipate the RBNZ to cut OCR sooner rather than later, with three cuts already priced in this year.
  • Traders will watch the US weekly Initial Jobless Claims and ISM Manufacturing PMI, due on Thursday. 

The NZD/USD pair remains on the defensive above the 0.6100 mark during the early Asian session on Thursday. The Federal Reserve (Fed) left rates unchanged at its January meeting and opened the door to rate cuts. However, Fed Chairman Jerome Powell indicated that the rate cut in March is too early. The pair currently trades around 0.6115, adding 0.03% on the day.  

Following the Fed interest rate decision, the US central bank maintained its benchmark interest rate on Wednesday in a range of 5.25%–5.50% and stated that it won’t begin lowering the target range until it sees further progress on inflation moving sustainably toward the 2% target. Investors had been anticipating a possible rate cut cycle at the March meeting, but Fed Chair Powell said that’s probably not the most likely case. 

On the other hand, the Reserve Bank of New Zealand (RBNZ) targets maintaining inflation within the 1% to 3% range, with its focus on keeping future inflation around the 2% midpoint. With inflation easing, financial markets expect the Official Cash Rate (OCR) to be cut sooner rather than later, with three cuts already priced in this year.

Moving on, the January Chinese Caixin Manufacturing PMI, US weekly Initial Jobless Claims and ISM Manufacturing PMI will be due on Thursday. The attention will shift to US employment data on Friday, including Nonfarm Payrolls, Unemployment Rate, and Average Hourly Earnings for January.