• NZD/USD collapsed after US CPI rose higher than estimated, further cementing a large Fed interest rate increase.
  • August inflation in the US flashed signs of being stickier than expected.
  • Traders await NZ Current Account alongside US PPI on Wednesday.

The NZD/USD sinks more than 100 pips or 2% during Tuesday’s North American session, spurred by a hot US inflation reading, which favors the US Federal Reserve’s case of a 75 bps rate hike in the September 20-21 meeting. That, alongside higher US Treasury bond yields and a stronger greenback, triggered a risk-off impulse.

The kiwi began trading around 0.6140 and edged toward the daily high at 0.6161. However, as US economic data was released, the NZD/USD slumped to the daily low at 0.6009 before trimming some of its late losses. At the time of writing, the NZD/USD is trading at 0.6007, down 2.12%.

NZD/USD dropped after elevated US CPI

The US Bureau of Labor (BLS) reported that August inflation rose by 0.1% MoM, highest than estimates of a contraction of 0.1% by market participants, while annually based, it hit the 8.3% threshold, also exceeding expectations. The so-called core Consumer Price Index (CPI), which excludes food and energy, ticked up 0.6% MoM,  above July’s 0.3%, due to higher rent and medical indexed, as reported by the BLS. The year-over-year core CPI rose by 6.3%, more than 5.9% in July.

Elsewhere, market participants have fully priced in a 75 bps rate hike next Wednesday at FOMC’s meeting, while odds of a 100 bps increased to 20% via the CME FedWatch Tool.


Source: CME FedWatch Tool

In the meantime, the US Dollar Index, a measure of the buck’s performance against a basket of peers, is rallying more than 1%, up at 109.606, underpinned by higher US Treasury yields, like the 10-year benchmark note rate at 3.447%, gaining close to 9 bps.

On the New Zealand side, the ANZ House Price Index fell 1.3% MoM in August, while adjusted sales printed a solid 4.9%. Later in the day, the New Zealand economic docket will reveal the Current Account data for the second quarter.

The US economic docket will feature the Producer Price Index (PPI) for August on Wednesday, with the headline foreseen at -0.1% MoM, while the core PPI is expected at 0.3%.

NZD/USD Key Technical Levels

NZD/USD

Overview
Today last price 0.6007
Today Daily Change -0.0126
Today Daily Change % -2.05
Today daily open 0.6136
 
Trends
Daily SMA20 0.6158
Daily SMA50 0.6211
Daily SMA100 0.6298
Daily SMA200 0.654
 
Levels
Previous Daily High 0.6159
Previous Daily Low 0.6084
Previous Weekly High 0.6153
Previous Weekly Low 0.5996
Previous Monthly High 0.647
Previous Monthly Low 0.6101
Daily Fibonacci 38.2% 0.613
Daily Fibonacci 61.8% 0.6112
Daily Pivot Point S1 0.6093
Daily Pivot Point S2 0.6051
Daily Pivot Point S3 0.6018
Daily Pivot Point R1 0.6169
Daily Pivot Point R2 0.6202
Daily Pivot Point R3 0.6244

 

 

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Feed news Join Telegram

Recommended content


Recommended content

Editors’ Picks

AUD/USD declines below 0.6700 amid weak Aussie Retail Sales, China’s covid protests

AUD/USD declines below 0.6700 amid weak Aussie Retail Sales, China’s covid protests

AUD/USD is extending its decline below 0.6700, undermined by a resurgent safe-haven demand for the US Dollar amid a risk-off theme at the start of the week. China's covid protests and weak Australian Retail Sales add to the weight on the Aussie. 

AUDUSD News

EUR/USD tumbles toward 1.0300 amid risk aversion

EUR/USD tumbles toward 1.0300 amid risk aversion

EUR/USD is falling hard toward 1.0300 after kicking off the week’s trading with a downside gap, as the risk-off mood underpins the US Dollar’s demand during Monday’s Asian session. The downbeat comments from ECB  policymaker Makhlouf exert bearish pressure on the Euro. 

EUR/USD News

Gold snaps four-day uptrend below $1,750 as covid woes sour sentiment

Gold snaps four-day uptrend below $1,750 as covid woes sour sentiment

Gold price drops for the first time in five days while printing sizeable losses below $1,750 during early Monday. The yellow metal bears the burden of the market’s sour sentiment, amid intensifying Chinese covid woes, ahead of important data due later this week.

Gold News

Binance Coin: Two things need to happen for BNB to hit $450

Binance Coin: Two things need to happen for BNB to hit $450

Binance Coin price could be running out of gas to continue its massive rally. While the last five days have been exciting times for holders, the following days will need to be closely monitored. The threat of a downswing looms for BNB.

Read more

Week Ahead: Decisive week for the Dollar as PCE inflation and NFP reports coming up

Week Ahead: Decisive week for the Dollar as PCE inflation and NFP reports coming up

After the Thanksgiving downtime that generated some further weakness for the greenback, investors will be looking for fresh direction from the barrage of US economic data that will be dominating the agenda in the coming week.

Read more

Forex MAJORS

Cryptocurrencies

Signatures