- NZD/USD slumps to around 0.5630 in Wednesday’s early European session, down 0.50% on the day.
- RBNZ rate cut bets exert some selling pressure on the Kiwi.
- The FOMC Minutes from the latest meeting and the delayed US September NFP report will be the highlights later this week.
The NZD/USD pair remains on the defensive near 0.5630 during the early European session on Wednesday. Expectations of an imminent interest rate cut from the Reserve Bank of New Zealand (RBNZ) exert some selling pressure on the New Zealand Dollar (NZD) against the Greenback. The FOMC Minutes will be in the spotlight later on Wednesday.
New Zealand’s Unemployment Rate rose to 5.3% in the September quarter, indicating a softening labor market. This, along with a struggling domestic economy and a weakening inflation outlook, pointed to underlying weakness in the economy and boosted the RBNZ rate cut bets. Markets are largely pricing in a 25 basis point reduction to the Official Cash Rate (OCR) by the RBNZ at its November meeting next week.
Traders await the FOMC minutes from the latest meeting and the delayed US September Nonfarm Payrolls (NFP) report. FOMC Minutes are scheduled for Wednesday, and they could offer some insights into the Fed’s monetary policy discussions. If the minutes suggest that the Fed is leaning towards hawkish or is more cautious about cutting the interest rates, it could lift the Greenback and create a headwind for the pair.
All eyes will be on the US NFP data on Thursday. For the delayed US September NFP data, the market consensus is for 50,000 jobs added in September, compared to 22,000 in August. The Unemployment Rate in the US is projected to stay at 4.3% during the same period. In case of a weaker-than-expected outcome, this could raise concerns over the US labor market and weaken the USD against the NZD.
