NZD/USD struggles to capitalize on a modest intraday uptick to over a two-week top.
The mixed NZ jobs data and a modest USD uptick overshadow the trade optimism.
Traders now look to the crucial FOMC decision before placing fresh directional bets.
The NZD/USD pair retreats following an Asian session uptick to the 0.6020-0.6025 area, or over a two-week high, and for now, seems to have snapped a three-day winning streak. Spot prices slide back below the 0.6000 psychological mark, hitting a fresh daily low in the last hour amid a combination of negative factors.
The global risk sentiment gets a strong boost following the announcement of the US-China trade talks in Switzerland this week. Adding to this, slightly better-than-expected labour market statistics from New Zealand, showing that the Unemployment Rate held steady at 5.1% in the first quarter of 2025 compared to forecast for another small rise, provided a modest boost to the NZD/USD pair.
Additional details revealed that the number of people employed rose by 0.1% following a 0.2% fall in the previous quarter. The initial market reaction, however, turns out to be short-lived as the small rise in employment and a continuous slowdown in the wage growth keep the door open for further interest-rate cuts by the Reserve Bank of New Zealand (RBNZ), potentially to 2.75% by the year-end.
The expectations were further reaffirmed by the RBNZ's latest Financial Stability Report, which highlighted concerns that the trade turmoil has increased downside risks to domestic economic growth. Apart from this, a modest US Dollar (USD) uptick exerts some downward pressure on the NZD/USD pair. The USD bulls, however, might opt to wait for the outcome of a two-day FOMC meeting.
The Federal Reserve (Fed) is scheduled to announce its decision later this Wednesday, though the market focus will be on the accompanying policy statement. Apart from this, Fed Chair Jerome Powell's remarks at the post-meeting press conference will be scrutinized for cues about the rate-cut path. This, in turn, will influence the USD demand and provide a fresh impetus to the NZD/USD pair.
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