NZD/USD reclaims 0.6000 level as US data fuels dovish Fed speculation

• NZD/USD rises 0.36%, breaking above 0.6000, boosted by weaker US inflation and retail sales data, which points to a possible pause in Fed rate hikes.
• The pair’s rise is bolstered by strong industrial and retail sales figures from China, which increase risk appetite and support the New Zealand Dollar.
• Despite the recovery in the Dollar Index, the Kiwi benefits from market speculation of an 88 basis point rate cut by the Fed in late 2024, with key economic data from the US and New Zeeland ahead.

He New Zealand dollar (NZD) advances 0.36% compared to US dollar (USD), and buyers reclaim the 0.6000 level on Wednesday, thanks to mixed data in the United States (US). The pair moved from the day’s low at 0.5996 and peaked at 0.6054 before the reversal towards current exchange rates as NZD/USD trades at 0.6028.

Kiwi advances after mixed US economic reports, strong Chinese data

Over the past two days, the US economic calendar has featured inflation reports from both the consumer and producer sides, with both readings below estimates. The October CPI stood at 3.2% year-on-year, below forecasts and the previous 3.7% expansion, while the annual Producer Price Index (PPI) rose 1.3%, below September forecasts and 2.2% and 1.9%, respectively.

The data sparked speculation that the Fed may have ended its tightening cycle. Traders in interest rate futures linked to the federal funds rate have priced in 88 basis points of rate cuts by the end of 2024, causing US Treasury yields to fall.

In other data released by the Commerce Department, US retail sales disappointed analysts, contracting -0.1% month-on-month in October, less than the consensus of -0.3%.

The NZD/USD pair rises despite the recovery of the Dollar, as shown by the Dollar Index (DXY). The DXY gained 0.23% to 104.30, although it is trading in the red for the week.

In New Zealand (NZ), the economic agenda was absent, but strong Chinese economic data improved risk appetite and supported the Kiwi Dollar (NZD). China’s Industrial production rose 4.6% year-on-year, above estimates and last month’s readings, while retail sales soared 7.6% year-on-year, beating forecasts of 7% and above September’s 5.5% .

In the United States, applications for unemployment benefits, Industrial Production and the Federal Reserve (Fed) will be published. On the NZ front, the Producer Price Index (PPI).

NZD/USD technical levels