NZDUSD continues to rise and hits fresh 2-month all-time highs above 0.6100

• Kiwi reaches new two-month all-time highs, breaking above 0.6100.
• Hopes of a slower pace of Fed tightening are crushing demand for the US dollar.
• NZDUSD will consolidate in the coming days/weeks — ANZ.

The NZD is seeing a strong two-day rally, buoyed by positive market sentiment on Friday. The pair has risen around 3.8% in the last two days to reach prices just above 0.6100 at the time of writing.

Broad dollar weakness has pushed the NZD higher.

Positive market sentiment following the release of US inflation data on Thursday has weighed on the dollar, boosting demand for the sentiment-linked kiwi.

US consumer inflation fell below expectations in October, with annual inflation at 7.7% from 8.2% in September. These data suggest that price pressures may have started to ease, which has spurred expectations of a “dovish turnaround” by the Federal Reserve.

Furthermore, news that Chinese authorities have decided to ease COVID-19 restrictions has further buoyed market sentiment, acting as a tailwind for the NZD as New Zealand is one of China’s major trading partners. .

On the economic calendar, the US Preliminary Michigan Consumer Sentiment Index anticipated a larger-than-expected deterioration in November. Rising prices and concerns about rising interest rates are weighing on consumer confidence.

NZDUSD: Consolidation for the coming days/weeks — ANZ

Looking ahead, ANZ analysts expect the pair to consolidate gains in the coming days or weeks: “The dollar fell sharply after the release of much softer than expected US CPI data (…) However, we are not out of the woods yet, and US markets are still pricing in cuts in June, and if these are discarded, this could slow down the adjustment of the dollar (…).(…) Local interest rates will also fall today, which could slow down the advance of the New Zealand dollar a bit and leave markets in a more consolidated mood for the coming days/weeks.”

Technical levels to watch