The NZD/USD pair remains under some selling pressure for the fourth straight day and trades just below mid-0.5700s during the Asian session on Friday. Spot prices remain depressed and move little following the release of the latest inflation figures from China, as traders keenly await the highly anticipated US Nonfarm Payrolls (NFP) report, due later today.
China’s National Bureau of Statistics (NBS) reported that the headline Consumer Price Index (CPI) rose at an annual rate of 0.8% in December, up from a 0.7% increase in the previous month. The reading, however, was lower than consensus estimates for a 0.9% growth. Meanwhile, the Producer Price Index (PPI) fell 1.9% year-on-year, compared with a 2.2% fall in November, and pointed to moderating deflationary pressures. The data, however, fails to provide any meaningful impetus to antipodean currencies, including the Kiwi.
Rising geopolitical tensions assist the safe-haven US Dollar (USD) in preserving its weekly gains to a one-month high, touched on Thursday, and continues to act as a headwind for the risk-sensitive New Zealand Dollar (NZD). However, dovish US Federal Reserve (Fed) expectations might keep a lid on any further USD appreciation. Furthermore, the Reserve Bank of New Zealand’s (RBNZ) hawkish outlook on the future policy path offers support to the NZD and might contribute to limiting the downside for the NZD/USD pair.
In fact, RBNZ Governor Ann Breman had said that the policy rate is likely to remain at its current level for an extended period if economic conditions unfold as expected. This, in turn, warrants some caution for bearish traders heading into the key US data risk. Hence, it will be prudent to wait for some follow-through selling below the weekly low, around the 0.5725-0.5720 region, before positioning for any further depreciating move for the NZD/USD pair, which seems poised to register losses for the second consecutive week.
Economic Indicator
Consumer Price Index (YoY)
The Consumer Price Index (CPI), released by the National Bureau of Statistics of China on a monthly basis, measures changes in the price level of consumer goods and services purchased by residents. The CPI is a key indicator to measure inflation and changes in purchasing trends. The YoY reading compares prices in the reference month to the same month a year earlier. Generally, a high reading is seen as bullish for the Renminbi (CNY), while a low reading is seen as bearish.
