NZD/USD pares early gains, retreats to 0.6980 area
|- NZD/USD struggles to hold above 0.7000 on Tuesday.
- US Dollar Index continues to push higher during the European session.
- Focus shifts to June CPI data from the US.
After closing the first trading day of the week in the negative territory, the NZD/USD pair edged higher during the Asian session and reached a daily high of 0.7010 before losing its traction. As of writing, the pair was virtually unchanged on a daily basis at 0.6980.
Earlier in the day, the data from New Zealand showed that the Food Price Index increased by 1.4% on a monthly basis in June. More importantly, China posted a trade surplus of $51.5 billion, compared to analysts' estimate of $44.2 billion, with Exports rising by 32.2% (in USD terms) on a yearly basis in June. Although these figures helped the kiwi find demand, the renewed USD strength in the European session forced NZD/USD to turn south.
Eyes on US inflation report
The US Dollar Index, which tracks the USD's performance against a basket of six major currencies, is up 0.15% on the day at 92.36.
Later in the session, the US Bureau of Labor Statistics will release the Consumer Price Index (CPI) data for June. Investors expect the CPI to come down to 4.9% on a yearly basis from 5% recorded in May.
Previewing this data, "the important and unanswered question is how much inflation has been created by the economic dislocation of the lockdowns," noted FXStreet senior analyst Joseph Trevisani. "Market response to the June and subsequent CPI figures will be restrained until we begin to get an answer to that important question."
US Consumer Price Index June Preview: Has inflation peaked?
Technical levels to watch for
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