NZD/USD steadies near 0.5650 ahead of China/US statistics

• NZD/USD grinds higher after a volatile day, prints four-day uptrend.
• US dollar’s weakness post-CPI favors bulls against all odds.
• China’s covid updates add to the risk-negative headlines, Business NZ PMI also eased in September.
• China’s inflation, trade numbers can probe buyers on matching downbeat forecasts, US Retail Sales eyed as well.

NZD/USD seesaws around 0.5640-50 after a volatile day that initially refreshed the yearly low before closing on a positive side. While there are multiple theories surrounding the quote’s previous run-up despite the firmer US inflation data, the kiwi pair’s latest inaction could be linked to a cautious mood ahead of the key economics from China and the US.

Additionally, the recently released New Zealand Business NZ PMI also challenges the NZD/USD buyers while easing to 52.0 in September versus 52.5 expected and 54.9 prior.

US Dollar Index (DXY) failed to cheer the 40-year high US Core CPI the previous day, which in turn gained the major attention of the NZD/USD buyers. The reason could be linked to the headline Consumer Price Index (CPI) third consecutive softer print. That said, the DXY dropped 0.70% to 112.45 by the end of Thursday’s North American session. It’s worth noting that the US CPI rose to 8.2% versus 8.1% market forecasts but eased as compared to the 8.3% prior. The CPI ex Food & Energy, mostly known as the Core CPI, jumped to 6.6% while crossing the 6.5% expectations and 6.3% previous readings.

On the same line, the money markets now fully price-in the 75 bps Fed rate hike and the same could have also fuelled the Kiwi pair as some on the floor have also placed bets on the 1.0% rate hike.

Alternatively, the recent jump in covid cases in China and Europe, as well as fresh lockdowns in Shanghai and increased hardships in Hong Kong, as well as Beijing, should have weighed on the pair but did not. Amid these plays, Wall Street closed positive and the yields were up too.

Moving on, China’s headlines CPI for September, expected 2.8% YoY versus 2.5% prior, will be important for the NZD/USD traders amid fears of more hardships for the dragon nation. Also on the Asian calendar are the September month trade numbers from the dragon nation. Following that, the US Retail Sales for September, the preliminary readings of the Michigan Consumer Sentiment Index (CSI) and the University of Michigan’s (UoM) 5-year Consumer Inflation Expectations for October will be crucial for clear directions.

Technical analysis

NZD/USD needs a daily closing beyond the monthly resistance line, around 0.5690 by the press time, to keep the reins.