NZD/USD climbs back above 0.6200 on sentiment improvement after US CPI

• NZD/USD reclaims the 0.6200 figure after Monday’s US banking crisis dented sentiment.
• US CPI figures came aligned with estimates, though inflation remains elevated.
• Traders eye US Retail Sales, PPI, and New Zealand GDP for Q4, 2022.

NZD/USD bounces off weekly lows of 0.6084 and rises, even though an inflation report in the United States (US) warrants further tightening by the US Federal Reserve (Fed). The NZD/USD stays firm at around 0.6221 after clearing the 20-day Exponential Moving Average (EMA).

US CPI for February aligned with estimates

Stocks went up again as worries about three US banks collapsing eased. The US Department of Labor (DoL) reported that yearly inflation in February matched predictions. The headline inflation measure, the Consumer Price Index (CPI), increased by 6%. Excluding food and energy, known as the core CPI, rose by 5.5%. Monthly readings witnessed the CPI at 0.4%, as expected, while the measure that excludes food and energy was 0.5%, higher than anticipated.

US central bank chief Jerome Powell said last week that the main interest rate would go higher than planned. He also noted that solid economic data would make interest rates rise faster. But the recent problems in the US banking system make traders expect a less aggressive central bank as they worry that more banks could go bankrupt.

US Treasury bond yields are up after Monday’s knee-jerk reaction plummeted them. The US 2s and 10s are back within familiar levels, with 2s at 4.389%, up 40 bps, while 10s are at 3.659%. Given that backdrop, the greenback’s fall stopped, as shown by the US Dollar Index (DXY). The DXY is gaining 0.17%, at 103.801.

What to watch?

On the New Zealand (NZ) front, an absent economic docket left traders adrift to market sentiment and US Dollar (USD) dynamics. However, on Wednesday, the NZ calendar will feature the Gross Domestic Product (GDP) for Q4, estimated at 3.3% YoY and -0.2% QoQ. On the US side, the calendar will feature Retail Sales and the Producer Price Index (PPI).

NZD/USD Technical Levels