NZD/USD drops to near 0.5650 as US Dollar appreciates ahead of Initial Jobless Claims

• NZD/USD extends its losing streak due to the hawkish tone surrounding the Fed's policy stance.
• US weekly Initial Jobless Claims could show an increase of 220K for the previous week, up from the prior 217K.
• The New Zealand Dollar failed to gain momentum despite the fresh stimulus measures from New Zealand and China.

NZD/USD continues to remain subdued for the third consecutive session, trading around 0.5660 during the European hours on Thursday. The pair's downside is attributed to the stronger US Dollar (USD) amid hawkish sentiment surrounding the US Federal Reserve's (Fed) policy stance.

According to the CME FedWatch tool, traders are confident that the Fed will keep its key borrowing rates in the range of 4.25%-4.50% in the upcoming three policy meetings. Moreover, US President Donald Trump's policies could drive inflationary pressures, potentially limiting the Fed to just one more rate cut in 2025.

President Trump stated that his administration is considering imposing a 10% tariff on Chinese imports starting February 1. However, the proposed tariff is significantly lower than the previously threatened 60% rate, it aligns with the pledge Trump made during his presidential campaign.

Traders will likely monitor Friday's release of the preliminary US S&P Global Purchasing Managers Index (PMI) and the Michigan Consumer Sentiment Index for January. These indicators are likely to provide valuable insights into near-term economic trends.

The New Zealand Dollar (NZD) struggled to gain momentum on Thursday, despite the introduction of fresh stimulus measures from New Zealand and its key trading partner, China. New Zealand's Prime Minister Christopher Luxon announced plans to ease foreign investment regulations, aiming to attract and support overseas investors. However, the NZD remained under pressure, reflecting broader market concerns and cautious sentiment.

Chinese authorities introduced several measures to stabilize its stock markets, including allowing pension funds to increase investments in domestic equities. A pilot scheme enabling insurers to purchase equities will be launched in the first half of 2025, with an initial scale of at least 100 billion Yuan.