The New Zealand dollar was steady early Monday as markets await domestic jobs data and the US Federal Reserve’s policy meeting.
The kiwi was trading at 66.60 US cents at 8am, little changed from 66.59 late Friday in New York. The trade-weighted index was at 72.62 versus 72.67 Friday
The US dollar got a lift from data showing the economy grew 3.2 percent in the first three months of the year, well above the 2.3 percent forecast by economists – but eased back as investors await key US Personal Consumption Expenditures Prices data for March for any sign of inflation. The data due later today in the US will shape what markets expect from the FOMC this week.
The “official PCE numbers will be key. It looks like inflation just isn’t there but everything else is going gangbusters, and that creates a bit of a problem for the Fed,” said Mike Shirley, a dealer at Kiwibank.
“This week’s FOMC meeting will, once again, garner plenty of market attention. A consistent improvement in the US data pulse of late has led many commentators to reduce the odds of future rate cuts in the US. That said, a benign inflation backdrop has allowed many to maintain their arguments for future rate cuts,” said ANZ Bank FX/rates strategist Sandeep Parekh.
Domestically, investors will be watching jobs data due on Wednesday, in particular for any signs of possible wage inflation as New Zealand’s central bank also grapples with relatively strong growth but benign inflation. Economists are expecting the unemployment rate to be 4.2 percent, according to the median in a Bloomberg poll. They expect wage inflation to remain tepid.
Chinese PMI data Tuesday will also be on investors’ radar as will US jobs data later in the week, said Shirley.
The New Zealand dollar was trading at 94.45 Australian cents from 94.61 late Friday. It was at 51.48 British pence from 51.51, at 59.63 euro cents from 59.71, at 74.21 Japanese yen from 74.28 and at 4.4749 Chinese yuan from 4.4803.