The NZD/USD pair is recouping some losses, trading around 0.5605 during the early European session on Thursday. However, the pair’s upside may be capped as an anticipated rate cut from the Reserve Bank of New Zealand (RBNZ) could exert downward pressure on the New Zealand Dollar (NZD) against the US Dollar (USD). The crucial US September employment report is scheduled for release later on Thursday.
Earlier on Thursday, the People’s Bank of China (PBOC) opted to keep its Loan Prime Rates (LPRs) unchanged, with the one-year and five-year LPRs remaining at 3.00% and 3.50% respectively.
In New Zealand, the Unemployment Rate climbed to 5.3% in the September quarter, signaling a softening labor market. This, coupled with a struggling domestic economy and a weakening inflation outlook, underscores underlying economic fragility and has intensified expectations for an RBNZ rate cut. The prospect of such a policy might drag the Kiwi lower in the near term.
The Federal Open Market Committee (FOMC) minutes from its October meeting, released on Wednesday, revealed divisions among officials regarding future interest rate adjustments. Many participants favored lowering the target range, while some “could have also supported” maintaining rates, and “several were against” any reduction.
The delayed US September employment report from the Bureau of Labor Statistics (BLS) will finally be published following the government shutdown. Economists anticipate the report to show approximately 50,000 new jobs added in September. Average Hourly Earnings are projected to increase by 0.3% month-over-month, with the Unemployment Rate estimated to remain at 4.3%.
This report could offer crucial insights into the likelihood of an interest-rate cut next month. A weaker-than-expected outcome could undermine the Greenback and act as a tailwind for the NZD/USD pair.
Here’s an image that illustrates NZD/USD holding positive ground, showing the influence of the PBOC holding rates, while also depicting the looming RBNZ rate cut and the awaited US employment report.
