NZD/USD looks comfortable above 0.6200 amid softer US Dollar

• NZD/USD is on a bullish ride in a relaxed market mood.
• US CPI comes in almost in line with softening service-led inflation.
• The New Zealand GDP data is in focus on measuring the cyclone impact.   

NZD/USD is keeping its bullish momentum intact after hitting the low near0.6220 level. The NZD/USD advance comes on the back of US Dollar weakness amid falling US Treasury bond yields. The high beta currency was also kicked up by firmer equity complexes from the last three days.

The US Dollar-driven move underpinned the pair, earlier in the week, after the recent fallout of Silicon Valley Bank (SVB) and Signature Bank. The aforementioned incident made a direct impact on US Treasury yield complexes. 

The shorter end of the yield curve has come under considerable pressure after the SVB fallout and prompted investors to price out for a 50 basis point (bps) rate hike expectation for the March FOMC meeting. 

Even though the worsening underlying financial ecosystem has prompted the market participants to range from no Fed rate hike to a 25 bps hike. 

Meanwhile, the US Consumer Price Index (CPI) released on Tuesday came in line with expectations. The headline MoM figure came in at 0.4% as expected, from the prior 0.5%, and the YoY figure came in at 6% in line with expectation, from the prior 6.4%. The MoM core reading came in slightly higher at 0.5% vs. 0.4% expected, from the prior 0.4% and core YoY 5.5% in line with the expectation from the prior 5.6%.

On the other hand, the economic calendar will feature the Gross Domestic Product (GDP) data for New Zealand on Thursday. The quarterly reading for Q4, 2022 is expected around -0.2%, QoQ, and 3.3% YoY from the prior 2% and 6.4%, respectively. The expected slowdown is attributed to Cyclone Gabrielle, which has affected at least a third of New Zealand's population of five million. Any significant deviation on the downside may prompt the Reserve Bank of New Zealand (RBNZ) to take a pause in the rate hiking cycle. 

The immediate focus now remains on the Chinese activity data for fresh trading impetus on the Kiwi pair. 

Levels to watch