NZD/USD FLUCTUATES AS SENTIMENT DETERIORES, DESPITE RBNZ'S RATE HIKE SPURRING AN INITIAL SURGE

The New Zealand Dollar (NZD) reversed its course against the US Dollar (USD), after hitting a fresh two-month high at 0.6379, following an astonishing 50 bps hike by the Reserve Bank of New Zealand (RBNZ). However, sentiment shifting sour spurred flows toward safe-haven assets. Therefore, the NZD/USD is trading at 0.6331, clinging to minimal gains of 0.30%.

NZD/USD clings to decent gains as the US Dollar recovers

Economic data from the United States (US) continued to show deterioration. The ISM Non-Manufacturing PMI, also known as Services, fell to 51.2, below estimates of 54.4, and trailed February’s 55.1 reading. The index fell due to weaker new orders growth and softer business activity. Earlier data revealed that private hiring in February rose 145K below estimates of 200K and trailed January, which was upwards revised to 261K.

Given the latest round of labor market metrics pointing to deterioration, a jump in Initial Jobless Claims for the latest week could open the door for a weaker US Nonfarm Payrolls figure. Analyst estimates payrolls for March at 240K, below February’s 311K.

The greenback is recovering some ground after falling to fresh two-month lows at 101.42, as shown by the US Dollar Index. At the time of typing, the DXY sits at 101.780, up 0.41%.

On the New Zealand (NZ) front, the RBNZ surprised the markets and hiked the Overnight Cash Rate (OCR) by 50 bps to 5.25%. The RBNZ sees upside risks to inflation, according to February’s Monetary Policy Statement (MPS).