NZD/USD bears pile on as the greenback rallies

• NZD/USD bears move in as the greenback perks up again. 
• The RBA will be a key event for Asia while traders await more clues for the Fed in this week's US CPI. 

NZD/USD is offered in the Tokyo morning as the US dollar advances on old resistance on the daily chart as measured by the DXY index. At 0.6466, the kiwi is down some 0.36% and has fallen from a high of 0.6493 to a low of 0.6460 so far. The US dollar continues to gain against a basket of major currencies as risk appetite waned from earlier levels.

Overnight, US stocks were closing well off their earlier highs to increase the appeal of the safe-haven ahead of a key reading on inflation later in the week and the Reserve Bank of Australia today in Asia. The benchmarks, however, managed to end the day in the green but pared earlier gains while solar companies climbed after the Biden administration announced a two-year tariff exemption for solar imports from four Southeast Asian nations.

The Dow Jones Industrial Average was a tough higher at 32,915.78, the S&P 500 added 0.3% to 4,121.43 and the Nasdaq Composite moved up by 0.4% to 12,061.37. Meanwhile, after touching a near 20-year high of 105.01 on May 13, the US dollar index (DXY) had eased back to around the 102 level, although Friday's strong payrolls report helped the dollar notch its first weekly gain in three and we are seeing a follow-through of this on Tuesday in Asia. The index is now 0.20% higher at 102.62.

Ahead of the Federal Reserve's policy announcement on June 15, in which the central bank is widely expected to raise rates by 50 basis points, investors will be keenly eyeing the Consumer Price Index data and looking for signals for how long the Fed may need to continue hiking rates.

''Core prices likely stayed strong in May, with the series registering a second consecutive 0.5% MoM increase,'' analysts at TD Securities explained. ''A drag on inflation recently, we now expect used vehicle prices to be a contributor, advancing for the first time in four months. We also look for continued momentum in airfares and shelter inflation. Our m/m forecasts imply 8.4%/5.9% YoY for total/core prices.''

Domestically, this week, traders will be looking out for the first quarter manufacturing data on Friday but analysts at ANZ Bank argued ''that isn’t likely to perturb markets a great deal, so Kiwi is likely to continue to move on global themes, with the RBA decision this afternoon up next (our AU team expect a 40bp hike to 0.75%).''

''The ECB’s meeting this week is key – as is, we think, the fact that WTI crude oil is back up near record highs (adding to pain as well as inflation pressures via the fuel pump). A recipe for volatility? Maybe.''