NZD/USD trades higher around 0.5680 on Thursday at the time of writing, up 0.16% on the day, as investors reduce their exposure to the US Dollar (USD) ahead of the release of the US Nonfarm Payrolls (NFP) report.
The pair benefits from the Greenback’s weakness following a string of softer-than-expected US economic data and a less hawkish tone from Federal Reserve (Fed) Chair Kevin Warsh
The ADP Employment Change report showed that the US private sector added just 98K jobs in June, below market expectations, while the Institute for Supply Management (ISM) Manufacturing Purchasing Managers Index (PMI) eased to 53.3, also missing forecasts. These releases tempered expectations for a more aggressive tightening cycle by the Fed and shifted investors’ focus toward the official employment report. Speaking at the European Central Bank (ECB) Forum on Wednesday, Kevin Warsh reiterated that inflation remains above the central bank’s 2% target but stopped short of providing clear guidance on the next monetary policy decision.
His remarks were perceived as less hawkish than expected, adding pressure on the US Dollar. Market sentiment also improved on signs of easing geopolitical tensions in the Middle East. Qatari officials reported progress in talks between the United States (US) and Iran, while US Vice President JD Vance said negotiations were advancing positively, reducing demand for safe-haven assets, including the US Dollar.