- NZD/USD edges higher to around 0.6285 in Wednesday’s early Asian session.
- The US ISM Manufacturing PMI came in worse than expected in September.
- The RBNZ is expected to cut its cash rate by 50 basis points.
The NZD/USD pair gathers strength near 0.6285 despite the firmer US Dollar (USD). Nonetheless, the cautious mood in the market amid the escalating tension in the Middle East could lift the Greenback. Investors will keep an eye on the US ADP Employment Change and Fedspeak.
The weaker-than-expected US economic data caps the Greenback’s upside. The ISM Manufacturing PMI for September remained steady at 47.2 in September, unchanged from the previous reading, but missing estimates of 47.5. This figure was below the 50% threshold for the sixth consecutive month.
Iran launched over 200 ballistic missiles at Israel and Prime Minister Benjamin Netanyahu vows to retaliate against Iran for the missile attack on Tuesday, but Tehran warned that any response would result in "vast destruction, fuelling fears of a wider war. The rising geopolitical risks could support the US dollar (USD), a safe-haven currency.
On the Kiwi front, HSBC analysts expect more aggressive interest rate cuts from the Reserve Bank of New Zealand (RBNZ),in the upcoming months due to signs of a slowing economy. The bank anticipate the RBNZ to lower its cash rate by 50 basis points (bps) in both October and November, a change from its previous prediction of 25bp cuts in each of the two months. This, in turn, might cap the upside for the Kiwi in the near term.
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