- NZD/USD advances strongly to 0.6160 as US Dollar falls following expected growth in US PCE Inflation in April.
- Persistently high inflation in the US would affect the Fed's rate cut bets for September.
- Investors shift focus to ISM PMI and US Employment data.
The NZD/USD pair shoots up to 0.6160 in the American session on Friday. NZD/USD is seeing significant buying interest as the US Dollar weakens following the United States (US) Personal Consumption Expenditure (PCE) Price Index report for April, which showed that pressures on Prices grew in line with estimates.
Monthly and annual headline inflation grew as expected by 0.3% and 2.7%, respectively. Core PCE inflation, which is the Federal Reserve's (Fed) preferred inflation gauge as it excludes volatile food and energy prices, rose 0.2%, slower than estimates and the previous release of 0.3% in terms monthly. However, annual core PCE inflation increased as expected by 2.8%.
Persistently high PCE inflation makes it unlikely that the Fed will begin reducing interest rates as early as the September meeting. The scenario is generally favorable for the US Dollar, however, it is weak due to the downward revision of the US first quarter Gross Domestic Product (GDP) data. The revised estimate for the first quarter GDP shows that the economy expanded at a slower pace of 1.3% from the preliminary estimate of 1.6%.
The US Dollar Index (DXY), which tracks the value of the Dollar against six major currencies, is falling more than 0.3% around 104.40.
Next week, investors will focus on the manufacturing and services PMI, which will be released by the Institute for Supply Management (ISM) and Nonfarm Payrolls (NFP) for May.
The New Zealand Dollar is holding firm even though China's National Bureau of Statistics (NBS) reported that May manufacturing and non-manufacturing PMI missed estimates. In this situation, the New Zealand Dollar faces pressure, being a proxy for China's economic prospects.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
