NZD/USD breaks under 0.6550 amid a risk-off market mood

• The NZD is losing 0.53% during the New York session.
• US Core PCE closes to 5%, while Fed tightening conditions spurred market sentiment.
• Tensions in Eastern Europe ease as Russia engages in negotiations with the US.

As the North American session begins, the NZD/USD slides for the seventh straight day, unable to recover from its losses since January 20. At the time of writing is trading at 0.6552. Risk-aversion in the markets keeps safe-haven peers in the bid, while risk-sensitive currencies like the NZD, the AUD, and the GBP, fall.

US Core PCE inflation rises

The US Bureau of Economic Analysis reported on Friday that the Core Personal Consumption Expenditure (PCE) for December, the Fed’s favorite gauge of inflation, rose by 4.9%, 0.1% higher than expected, and left behind the 4.7% reported in November.

Concerns about the US central bank tightening dent the market sentiment

In the meantime, market participants keep digesting the Fed’s awaited change in monetary policy stance. Although the monetary policy statement was viewed as a “hawkish hold,” the initial reaction was no surprise. Nevertheless, Fed’s Chair Powell press conference rocked the boat, saying that “the committee is of a mind to raise the federal funds rate at the March meeting.”

Before Wall Street opened, Minnesota Fed President Neil Kashkari hit the wires. He said that the Fed needs to bring the US economy in balance by raising interest rates. Kashkari noted that the central bank does not know how many increases will take and emphasized that the Fed would be adjusting as more data comes in.

Eastern Europe tensions ease

During the European session, it crossed the wires that Russia is willing to engage with US security proposals and emphasized that it does not want the war over Ukraine, giving a slight relief for investors.