NZD/USD falls to fresh three-week lows below 0.6400

• NZD/USD falls to new three-week lows, despite the start of the RBNZ’s QT program.
• US initial jobless claims rose more than expected, but market players are focused on US inflation data.
• The RBNZ will start its Quantitative Tightening (QT) program with a rate of NZ$5 billion.

The NZD falls for the fifth day in a row after hitting a daily high at 0.6461. However the NZD/USD it is falling below 0.6400 amid a risk-off mood in the market. At the time of writing, the NZD/USD is trading at 0.6385, down 0.86%.

Risk aversion and dollar strength a headwind for NZD/USD

On Thursday, the European Central Bank (ECB) kept rates unchanged but laid the groundwork for a hike. Fears that more central banks will begin to tighten monetary conditions have market sentiment leaning towards risk-off. However, NZD/USD fell as investors sought safe-haven assets in the currency complex, which buoyed the dollar.

Before the open on Wall Street, the US Department of Labor reported that initial jobless claims for the week ending June 4 rose to 229,000, above the 210,000 forecast. Despite being a negative report, the market mostly ignored it as it is focused on Friday’s US inflation report.

The consumer price index (CPI) for May is expected to come in at 8.3% yoy, in line with the previous two readings. For its part, the core CPI is estimated at 5.9% year-on-year. Later in the day, the University of Michigan will release June’s preliminary reading of its Consumer Sentiment report, which will provide investors with a guide to how Americans are coping with the current economic outlook.

During the Asian session on Thursday, the Reserve Bank of New Zealand is preparing to unwind its pandemic stimulus program and will begin selling its securities to the Treasury Department’s debt office at a rate of NZ$5 billion. The RBNZ’s next monetary policy will be on July 15, at which market players expect another 50 basis point rate hike to leave interest rates at 2.50%.

Technical levels