NZD/USD attracts some buyers above 0.6130, US Consumer Confidence looms

• NZD/USD trades on a stronger note despite the stronger USD.
• The Federal Open Market Committee (FOMC) is expected to leave its key rate unchanged at 5.25–5.50% at its January meeting.
• RBNZ’s Conway said data suggests monetary policy is working, but there is a long way to go before inflation returns to its target of 2%.
• US JOLTS Job Openings and Consumer Confidence are due on Tuesday.

The NZD/USD pair holds ground above the 0.6100 psychological mark despite the firmer US Dollar (USD) during the early Asian session on Tuesday. The positive news of additional stimulus measures in China boosted the sentiment surrounding the China-proxy New Zealand Dollar (NZD). However, traders might turn cautious ahead of the Federal Open Market Committee’s (FOMC) January meeting on Wednesday. The pair retreats from an intraday high of 0.6143. At press time, the pair is trading at 0.6132, losing 0.01% on the day.

Inflation in the US is easing to the Federal Reserve’s (Fed) target and the economy is robust. Most economists anticipate the first rate cut will come in May or June, but a cut at the Fed’s March meeting is not off the table. The timing of rate cuts will almost definitely be the closely watched topic of the Fed’s two-day meeting, which ends Wednesday. The Fed is expected to leave its key rate unchanged at 5.25–5.50% at its January meeting. On Monday, the US Dallas Fed Manufacturing Business Index for January came in at -27.4 versus -10.4 prior.

On the other hand, the Reserve Bank of New Zealand (RBNZ) Chief Economist Paul Conway said on Tuesday that recent economic data suggests monetary policy is working but there is still a way to go before inflation returns to its midpoint of 2%. Meanwhile, the positive development surrounding new stimulus plans in China might boost the sentiment and cap the downside of the China-proxy New Zealand Dollar (NZD).

Ahead of the key event, the US JOLTS Job Openings and the Consumer Confidence gauge by the Conference Board will be due on Tuesday. The FOMC meeting policy will be announced on Wednesday. Adjusting the language in the statement they issue after the meeting will be in the spotlight.