Markets eye US inflation data, New Zealand braces for RBNZ rate decision

28 Feb 2024 , 09:44 AM

The US dollar remained stable as traders ignored data on durable goods that came in overnight and waited for the Federal Reserve’s preferred inflation gauge, which is expected on Thursday, to provide hints about when the country’s central bank would begin reducing interest rates.

Investors are also nervous about the Reserve Bank of New Zealand’s (RBNZ) interest rate announcement later in the Asian morning, even though the New Zealand currency is stable ahead of what may prove to be an important policy meeting.

According to the Census Bureau of the Commerce Department, orders for durable goods in the United States decreased 6.1% last month, which was more than the 4.5% drop predicted by Reuters’ panel of analysts.

With all eyes on the U.S. core personal consumption expenditures (PCE) price index, which is expected on Thursday, the market seemed unfazed by the data. Estimates point to a 0.4% increase.

According to CME’s FedWatch Tool, markets have essentially priced in a rate reduction at the Fed’s meetings in May and March, which comes after positive U.S. producer and consumer price data. There is a 51% possibility of a cut in June.

The U.S. dollar index, which compares the value of the dollar to a basket of its rivals, was centred at 103.82.

The euro steadied as the continent awaited a barrage of inflation reports of its own. Germany, France, and Spain were set to disclose inflation statistics on Thursday, ahead of the figures that the euro area was expected to issue on Friday.

At $1.0844, the euro remained largely steady against the US dollar. Since mid-February, when it reached its lowest point since November 14, it has been climbing.

In other news, the kiwi remained stable at $0.6171 while traders anticipated the RBNZ’s move.

The RBNZ is expected by all but one of the 28 economists surveyed by Reuters to maintain its cash rate at a 15-year high of 5.50%. Markets are pricing in a one-in-three possibility that the RBNZ would hike its 5.5% official cash rate in an effort to tackle persistent inflation.

Prior to the release of monthly consumer price data at 00:30 GMT, the Australian dollar remained largely stable at $0.65455. It is anticipated that annual inflation will increase from 3.4% to 3.6%.

In the meantime, the yen was trading at about 150.52 to the dollar, having risen as much as 150.08 over the previous night.

Japan’s core consumer inflation beat estimates, according to inflation data released on Tuesday. This maintained some predictions that the Bank of Japan will remove negative interest rates by April.

Bitcoin, one of the most popular cryptocurrencies, was up 0.54% at $57,035.76 as it continued to rise after hitting a two-year high above $57,000 on Tuesday.

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