NZD/USD bears trade below 0.6000 after US dollar strength and US CPI.

• The NZD bears are heading for a hard landing at the 0.60 level.
• NZD is testing below the level with a low of 0.5986 so far, the lowest level since 2020.

The NZD/USD has sold off heavily on Tuesday to the lowest levels since 2020, down around 2.4% at the time of writing and falling from a high of 0.6161 to a low of 0.5986 as we head into the early Asian open on Wednesday. US data has been to blame for the dollar rising along with US yields. The Federal Reserve will make its policy decision known at the end of its two-day meeting next week, on September 20-21.

The rally in the US consumer price index (which was assumed by consensus to have peaked) slammed into financial markets overnight, pushing NZD/USD back below the key 0.60 level this week. tomorrow,” analysts at ANZ Bank noted.

The data sent both the dollar and bond yields higher as expectations of an interest rate hike by the Federal Reserve were excessive. Inflation in the United States stood at an annualized rate of 8.3% in August, above expectations of an 8.0% rise. Markets are generally expecting 75 basis points when their monetary policy committee meets next week, lowering market hopes for a smaller hike.

However, there is a one in five chance that the Fed will raise rates by a full percentage point, up from zero a day before the CPI report, according to FEDWATCH. Analysts at Nomura said Tuesday that the Fed is likely to raise its short-term interest rate target by a full percentage point at its policy meeting next week, due to the emergence of upside inflation risks.

The data makes next week’s Fed decision more uncertain (yesterday it looked much more certain), said analysts at ANZ bank. Analysts at ANZ bank note that New Zealand’s current account balance data they are the key of the day: “We expect a deficit of 7.5% of the Gross Domestic Product, and that is big.”

Technical levels