NZDUSD oscillates above 0.6100 as the spotlight shifts to US Retail Sales

• NZDUSD juggles above 0.6100 amid quiet market mood.
• An increment in US long-term inflation expectations to 3% could spoil the risk appetite theme.
• Upbeat NZ Business PSI data has supported the antipodean.

The NZDUSD pair is displaying back-and-forth moves in the Tokyo session after reclaiming the 0.6100 hurdle. The commodity-linked currency is gaining momentum as the pullback move in the US dollar index (DXY), recorded at open, has started fading now.

The DXY displayed a minor pullback to near 106.70 after registering a fresh three-month low at 106.28 as the market mood is still bullish despite volatility amid an extended weekend for the US markets. S&P500 futures have displayed minor losses and the long-term US yields have rebounded to 3.88%.

A slowdown in October’s inflation report has indicated exhaustion in the inflationary pressures, however, a pause in policy tightening by the Federal Reserve (Fed) will take sufficient time. Fed Governor Christopher Waller has backed 50 basis points (bps) rate hike expectations for the December meeting but has cleared that rates won’t fall until clear evidence of a slowdown in inflation.

Also, economists at Danske Bank believe that due to the persistent nature of inflation, it would be early to call it a slowdown.  

Adding to that, the US long-term inflation expectations have improved to 3.0% from the prior release of 2.9%. This could cause a serious impact on the risk appetite theme as optimism in the market is backed by a decline in US inflation.

On the Kiwi front, the antipodean has benefitted from the upbeat Business PSI data released earlier. The economic catalyst has landed higher at 57.4 vs. the prior release of 55.9.

Going forward, the US Retail Sales data for October will remain focused, which is seen higher at 0.9% against the former release of 0%.