NZD awaits FOMC minutes, China’s forex reserve fell, and Britain’s services PMI slightly fell short of expectation

• NZD opened in negative territory, awaiting FOMC minutes
• China’s March forex and gold reserves fell
• Britain’s final March services PMIs slightly missed forecasts, but GBP remains strong

NZD trades in the negative territory today, currently around 0.90106 at press time, down about 0.06% since openings. March has been quite tough for NZD, which declined about 3.38%. Much of this is attributable to the strong uptrend in US Treasury yields that has boosted the strength of USD. Another downward push on NZD came from the government’s action to curb the aggressive rise in the housing prices, which has gone up more than 20% in the past 12 months, far ahead of wage growth. Investors were taking advantage of the cheap mortgages implemented during the pandemic to buy homes in order to make a quick profit. As a result, the government has stepped in and curbed some speculation, which effectively cooled down the currency market as well. For today, NZD investors will be eyeing on the FOMC minutes from the Fed, expected to release later today at 18:00 GMT. As the US labor market gradually improves its condition, how the Fed will respond to such strong numbers remains the key topic.

China has seen both its forex reserve and gold reserve falling in March. China’s forex reserve is the world’s largest and has fallen to $3.17 trillion last month, compared with a consensus of $3.19 trillion and $3.205 trillion in February. Gold reserve fell to $105.93 billion by the end of march, versus the prior release of $109.18 billion. The drop in forex reserve is primarily attributable to USD’s appreciation in the past month as Yuan fell 1.28% against USD in March.

Strength in both GBP and USD has led to volatility and fluctuations in this currency pair. On Wednesday the final services PMI has been released at 56.3, versus the expectation at 56.8. Services make up the biggest portion of Britain’s economic activity. Thus, the data slightly dipped GBP’s appeal against USD upon release. Yet, as Britain’s economy remains strong and in trajectory, GBP has kept its strength and prevented further slips.