NZD/USD improves to 0.6250 on risk-on mood, Chinese economic data

• NZD/USD intensifies on Chinese inflation and trade data.
• Chinese CPI year-over-year fell by 0.3%. Meanwhile, the monthly figure eased to 0.1%.
• Chinese Trade Balance USD increased to $75.34B in December and the yearly Imports CNY rose by 1.6%.
• US CPI YoY and MoM rose by 3.4% and 0.3%, respectively, in December.

NZD/USD moves higher on an upward trajectory for the second consecutive session on Friday, improving near 0.6250 during the Asian session. The NZD/USD pair receives upward support on improved risk appetite as traders bet on speculation of Federal Reserve’s (Fed) rate cuts in March and May despite upbeat inflation data from the United States (US). Additionally, the moderate Chinese inflation data seems to reinforce the strength of the New Zealand Dollar (NZD), given the close trade ties between the two nations.

In December, the Chinese Consumer Price Index (YoY) showed a decrease of 0.3%, diverging from the anticipated 0.4% decline. The monthly Consumer Price Index displayed a more modest easing at 0.1%, compared to the market expectation of 0.2%. Meanwhile, the yearly Producer Price Index recorded a decline of 2.7%, slightly surpassing the expected decrease of 2.6%.

Additionally, the Chinese Trade Balance USD for December increased to $75.34B from $68.39B prior, exceeding the expected $74.75B. Exports (YoY) figure showed a growth of 2.3% against the 1.7% as expected. Meanwhile, the yearly Imports CNY increased by 1.6% from 0.6% prior. Traders further expect the release of the US Producer Price Index (PPI) data for December, seeking additional insights into the economic landscape of the United States (US).

The US Dollar Index (DXY) treaded water to build on recent gains in the early Asian hours on Friday following the positive US inflation data. However, the DXY trades slightly lower near 102.20, notwithstanding the improved US Treasury yields. The 2-year and 10-year yields on US bond coupons trades at 4.26% and 3.97%, respectively, by the press time.

Furthermore, the upbeat US inflation data helped the US Dollar to achieve some upward traction. US Consumer Price Index (CPI) rose by 3.4% YoY in December, exceeding both November's 3.1% and the anticipated market figure of 3.2%. The monthly CPI growth for December showed a 0.3% increase, exceeding the market projection of 0.2%. The annual Core CPI eased to 3.9% from the previous reading of 4.0%, while the monthly figure remained consistent at 0.3%, in line with expectations.