NZD/USD continued its uptrend on a soft US Dollar

Wall Street is set for a lower close. The Institute for Supply Management (ISM) reported that the February US Manufacturing Purchasing Managers’ Index (PMI) was 47.7, lower than the estimated value of 48. Although it seems to have stabilized compared to the previous month’s reading of 47.4., the prices subcomponent increased significantly, causing concerns about inflation among investors.

That augmented speculations that the Federal Reserve would continue tightening monetary conditions as traders pushed back rate cuts, as the CME FedWatch Tool reported.

The NZD/USD trimmed some of its earlier gains on the ISM release and dipped toward 0.6222, before resuming the uptrend, despite hawkish comments by Federal Reserve officials.

Neil Kashkari of the Minnesota Fed commented that he’s open to raising rates by 25 or 50 bps at the upcoming meeting, while he foresees rates peaking around 5.4%. Of late, Atlanta’s Fed President Raphael Bostic commented that rates need to go as high as 5% - 5.25% and stood there “well into 2024.”

On the New Zealand (NZ) docket, the lack of data kept investors leaning on US Dollar dynamics and expectations that the Reserve Bank of New Zealand (RBNZ) is expected to raise rates in April, with odds for a 50 bps standing at 51%, per money market futures.