NZD/USD gains ground above 0.6100 following PBoC rate decision

• NZD/USD trades on a positive note near 0.6131 on Monday. 
• People's Bank of China (PBoC), the Chinese central bank, maintained the Loan Prime Rate (LPR) unchanged across the time curve.
• The US Michigan Consumer Sentiment Index climbed to 78.8, the highest level since July 2021.
• Traders await the New Zealand CPI inflation report on Wednesday. 

The NZD/USD pair gains momentum during the early Asian trading hours on Monday. The uptick of the pair is supported by the modest decline of the US Dollar (USD). The highlight this week will be New Zealand’s Consumer Price Index (CPI) for the fourth quarter (Q4) due on Wednesday. The pair currently trades around 0.6131, gaining 0.30% on the day. 

Early Monday, the People's Bank of China (PBoC) maintained the Loan Prime Rate (LPR) unchanged across the time curve. The Chinese central bank left the one-year and five-year LPR steady at 3.45% and 4.20%, respectively.

The New Zealand inflation report will be the key event for the pair. The CPI inflation figures are estimated to show an increase of 0.6% QoQ and 4.7% YoY in Q4. According to ANZ chief economist Sharon Zollner, the RBNZ is expected to lower the OCR by 25 basis points (bps) beginning in August, bringing it down from 5.5% to 3.5% over the next 12 months.

On the USD’s front, the Consumer Sentiment Index climbed to 78.8, the highest level since July 2021, the University of Michigan reported on Friday. The assessment of current economic conditions grew to 83.3, while the expectations component rose to 75.9. 

FOMC committee members enter the black-out period as they prepare for its January meeting. Investors will monitor the New Zealand CPI inflation report on Wednesday for fresh impetus. On Thursday, the preliminary US GDP Annualized (Q4) will be due. On Friday, the attention will shift to the December Core Personal Consumption Expenditures Price Index (Core PCE), which is projected to show an increase of 0.2% MoM and 3% YoY, respectively.