Meanwhile, the Reserve Bank of New Zealand (RBNZ) held the cash rate steady and issued commentary seen as dovish, sending the kiwi dropping to more than one-week low
The U.S. dollar held steady as traders brushed off manufactured goods data overnight and awaited the Fed’s preferred measure of inflation for hints on when the U.S. central bank may start cutting interest rates.
Meanwhile, the Reserve Bank of New Zealand (RBNZ) held the cash rate steady and issued commentary seen as dovish, sending the kiwi dropping to more than one-week low.
In the U.S., the Commerce Department’s Census Bureau said orders for durable goods dropped 6.1% last month.
The data did not seem to unnerve the market, with all eyes on the U.S. core PCE price index due on Thursday. Forecasts are for an increase of 0.4%.
Markets have largely priced out a rate cut at both the Federal Reserve’s March and May meeting, according to CME’s FedWatch Tool, following strong U.S. consumer and producer price data. The probability of a cut in June sits near 51%.
The U.S. dollar index hovered near 103.84.
With market expectations more closely aligned with the Federal Reserve’s latest projections and comments, traders would only respond if they see a trend break in tier one data, especially anything “hinting at growth weakness,” said Charu Chanana, head of currency strategy at Saxo.
In the meantime, the focus will be outside the U.S., particularly RBNZ meeting today or Eurozone inflation on Friday, to revive some level of volatility in the FX markets, Chanana added.
New Zealand’s central bank held the cash rate stable at 5.5% on Wednesday, sending the kiwi sliding 0.71% to more than one-week low of $0.61260.
Markets were pricing in a one-in-three probability the RBNZ would hike its 5.5% official cash rate to tackle sticky inflation.
Not only did the RBNZ defy hawks, they also released the doves, said Matt Simpson, senior market analyst at City Index.
The Australian dollar shed 0.08% to $0.65380 as market players digested softer-than-expected domestic monthly consumer price data.
The data showed inflation at an annual pace of 3.4% in January, unchanged from December and under market forecasts of 3.6%.
