• NZD/USD holds firm around 0.6050, supported by a weaker US Dollar and investor caution.
• Markets remain wary ahead of key US macroeconomic data, including delayed employment figures.
• Mixed New Zealand data curb expectations of near-term monetary tightening.

NZD/USD trades around 0.6050 on Monday, up 0.52% on the day, as the US Dollar (USD) remains under pressure. The pair extends its Friday rebound, with investors adopting a cautious stance amid uncertainty surrounding the release schedule of US economic data, disrupted by the partial federal government shutdown.

In the United States (US), attention is mainly focused on labor market figures due later this week. January’s Nonfarm Payrolls (NFP) report is expected to show stabilization in the labor market, with around 70,000 job gains and the Unemployment Rate seen holding steady at 4.4%. Market participants are also closely watching the delayed Consumer Price Index (CPI) release scheduled for the end of the week, which could influence monetary policy expectations.

Against this backdrop, the outlook for the Federal Reserve (Fed) remains central to market dynamics. Markets widely expect the Fed to leave interest rates unchanged at the March meeting, while continuing to favor a first rate cut in June, possibly followed by another move later in the year. Several Fed officials have recently pointed to an economy operating in a low-hiring, low-firing environment, reinforcing expectations of a gradual policy easing. These expectations are weighing on the US Dollar (USD) and mechanically supporting rival currencies, including the New Zealand Dollar (NZD).

In New Zealand, the latest economic data have delivered mixed signals. The Unemployment Rate has risen to a decade high, even as employment growth exceeded expectations. This combination reinforces the view that a near-term rate hike by the Reserve Bank of New Zealand (RBNZ) is unlikely. However, inflation remains above target, and signs of firmer economic growth continue to fuel speculation about a potential tightening later on.

Money markets are now fully pricing in a rate increase only from October, with a still-significant chance of action as early as September. The next RBNZ policy meeting, scheduled for February 18 and marking the first under the leadership of new Governor Anna Breman, is widely expected to result in rates being left unchanged, alongside updated economic and interest rate projections.

Overall, persistent US Dollar weakness, driven by expectations of Fed rate cuts and uncertainty surrounding upcoming macroeconomic data, allows NZD/USD to remain firmly anchored around the 0.6050 level, despite still-mixed domestic fundamentals in New Zealand.