Dollar firm with eyes on PCE data, kiwi drops as RBNZ holds rates
By Brigid Riley
TOKYO (Reuters) -The U.S. dollar held steady as traders brushed off manufactured goods data overnight and awaited the Federal Reserve's preferred measure of inflation for clues 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 falling to over a one-week low.
In the U.S., the Commerce Department's Census Bureau said orders for durable goods fell 6.1% last month, exceeding the 4.5% decline forecast by economists polled by Reuters.
The data did not seem to faze the market, with all eyes on the U.S. core personal consumption expenditures (PCE) price index due on Thursday. Forecasts are for a rise of 0.4%.
Markets have largely priced out a rate cut at both the Fed's March and May meeting, CME's FedWatch Tool showed, following strong U.S. consumer and producer price data. The chance of a cut in June sits around 51%.
The U.S. dollar index, which measures the currency against a basket of peers, hovered around 103.84.
With market expectations more closely aligned with the Fed'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.
«Meanwhile, 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.»
New Zealand's central bank held the cash rate steady at 5.5% on Wednesday, sending the kiwi tumbling 0.71% to over a one-week low of $0.61260.
Markets were pricing in a one-in-three chance the RBNZ would raise its 5.5% official
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