NZD/USD regains positive traction on Tuesday and is supported by subdued USD demand.
Bets for a June Fed rate cut and a positive risk tone keeps the USD bulls on the defensive.
Traders, however, seem reluctant and look to the key US CPI report for a fresh impetus.
The NZD/USD pair attracts some dip-buying during the Asian session on Tuesday, albeit lacks follow-through and remains confined within the previous day’s range. Spot prices currently trade around the 0.6src70-0.6src75 zone and for now, seem to have stalled the recent pullback from the highest level since February 22 touched last week.
The US Dollar (USD) continues with its struggle to attract any meaningful buyers or build on its recovery from a nearly two-month low touched in reaction to mixed US jobs report on Friday amid bets for a shift in the Federal Reserve’s (Fed) policy stance. In fact, the markets are now pricing in a greater chance that the US central bank will start cutting interest rates in June, which is reinforced by a further decline in the US Treasury bond yields. This, in turn, keeps the USD bulls on the defensive and lends some support to the NZD/USD pair.
Apart from this, a positive tone around the US equity futures is seen as another factor undermining the safe-haven Greenback and further benefitting the risk-sensitive Kiwi. Traders, however, seem reluctant to place aggressive directional bets and prefer to wait for the release of the latest US consumer inflation figures. The crucial US CPI report will play a key role in influencing market expectations about the Fed’s rate cut path and drive the USD demand. This, in turn, warrants some caution before positioning for any further appreciating move for the NZD/USD pair.
Investors this week will also confront the release of the Food Price Index from New Zealand on Wednesday, which will be followed by the US monthly Retail Sales figures and the Producer Price Index (PPI) on Thursday. This could further provide some meaningful impetus to the NZD/USD pair and possibly determine the next leg of a directional move.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.