- New Zealand Dollar finds sellers at 0.6075 with the USD picking up on a sourer market sentiment.
- Investors are increasingly cautious ahead of the all-important US CPI data, due on Wednesday.
- Somewhat earlier, the monetary policy statement of the RBNZ will be closely watched for more clues on the bank’s policy stance.
The New Zealand Dollar remains on the front foot for the second consecutive day on Tuesday. The pair, however, has found some supply at the 50% Fibonacci retracement of the March sell-off and is trimming losses as the market braces for the RBNZ decision and the US CPI release.
The RBNZ will, most likely, leave rates unchanged, thus the main focus will be on the statement. The New Zealand central bank is expected to be one of the last ones to start cutting rates, as inflation remains at levels more than twice the bank’s target rate. This and the improved data from China have been the main fundamental supports for the Kiwi.
Recent data, however, has shown a deteriorating economic outlook. The Q4 GDP confirmed the recession levels, which might open cracks in the bank’s hawkish stance. Any hints of a dovish turn on the statement might hurt the pair’s recovery.
Later on Wednesday, US CPI is expected to reveal that price pressures remain steady at levels above 3% in the US. After the strong US employment levels seen last week, further confirmation of resilient inflation will cast further doubt on the Fed’s easing plans. That would have a positive impact on the US Dollar.