NZD/USD refreshes monthly low near 0.6150 amid risk-off mood, US Retail Sales in focus

• NZD/USD has plunged to near 0.6150 on downbeat market sentiment.
• Investors project that the US Retail Sales grew by 0.4% vs. 0.3% increment in November.
• RBNZ Conway is expected to push back market expectations of early rate cuts.

The NZD/USD pair has printed a fresh monthly low near 0.6150 in the early New York session. The Kiwi asset has faced a sharp sell-off as investors have rushed towards safe-haven assets amid deepening crises in the Middle East region and uncertainty about when the Federal Reserve (Fed) will start its rate-cut cycle.

The S&P500 is expected to open on a bearish note, considering negative cues from overnight futures. The market mood is quite bearish as Iran-backed-Houthi rebels have threatened that they will strike back for launching airstrikes by the US military in Yemen.

Meanwhile, the US Dollar Index (DXY) looks firm near fresh weekly high around 103.20 as market participants are reviewing strong bets supporting a rate cut by the Fed in March. Investors have turned cautious about the Fed reducing interest rates from March as inflation data for December remained stubborn than projected.

Apart from that, Atlanta Fed President Raphael Bostic said it is too early to discuss rate cuts as the progress in inflation returning towards the 2% target has slowed.

Investors await the US Retail Sales data for December, which will be published on Wednesday. The economic data is expected to grow by 0.4% against 0.3% increase in November.

On the New Zealand Dollar front, investors await the speech from Reserve Bank of New Zealand (RBNZ) policymaker Paul Conway in which he is expected to push back market expectations supporting a rate cut sooner. The inflation in the New Zealand economy is significantly higher than what required by RBNZ policymakers, which would allow them to maintain a restrictive stance.