- NZD/USD shifts auction comfortably above 0.5900 amid improved market sentiment.
- There is a nominal improvement in China’s inflation data but the overall outlook is still vulnerable.
- Investors anticipate that US headline CPI grew at a pace of 0.5% due to a rebound in gasoline prices.
The NZD/USD pair stabilized the auction above the round-level resistance of 0.5900 in the late European session. The Kiwi asset aims to extend upside as the market mood improves amid an ease in China’s deflation risks.
The monthly Consumer Price Index (CPI) expanded by 0.3% in August as expected by the market participants. The expansion pace remained higher than July’s reading of 0.2%. Annual inflation rose to 0.1% from the prior print of 0.3% contraction while investors projected acceleration to 0.2%. Prices of goods and services at factory gates remained in the deflationary phase at -3.0% as projected by investors but improved from July’s figure of -4.4%.
There is a nominal improvement in inflation data but the overall outlook is still vulnerable as households’ demand is quite slim due to slow job growth. Investors hope a series of economic stimulus support from the administration and the People’s Bank of China to boost growth prospects. Premier Li Qiang said this week that China is expected to achieve its 2023 growth target of around 5%.
Meanwhile, the S&P500 is expected to open on a bullish note, following positive cues from overnight futures. The appeal for risk-perceived assets improved while the US Dollar Index (DXY) faced selling pressure. The USD Index finds an intermediate cushion near 104.60 as investors shift focus to the United States inflation data for August, which will be published at 12:30 GMT.
Investors anticipate that US headline CPI grew at a pace of 0.5% due to a rebound in gasoline prices. While core inflation expanded at a steady pace of 0.2%. A surprise upside in the US inflation pace could elevate the odds of one more interest rate hike from the Fed in the remaining year.
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.
Recommended content
Editors’ Picks
EUR/USD retreats from multi-week highs, holds above 1.0800
After climbing to its highest level in over a month above 1.0850 with the immediate reaction to the April inflation data from the US, EUR/USD erased a portion of its daily gains and declined below this level. The improvement seen in risk mood, however, helps the pair hold its ground.
GBP/USD clings to daily gains above 1.2600
GBP/USD pulled away from the monthly high it set above 1.2650 but managed to stabilize in positive territory above 1.2600. The US Dollar stays under modest bearish pressure as markets assess the underlying details of the inflation report and how they could influence the Fed's rate outlook.
Gold reaches fresh monthly highs, aims for $2,400
Gold trades modestly higher on the day above $2,360 in the American session. The data from the US showed that annual inflation edged lower to 3.4% in April as expected. The benchmark 10-year US Treasury bond yield stays in the red below 4.4%, allowing XAU/USD to keep its footing.
Ripple’s discounts for institutional clients stir debate among attorneys discussing SEC lawsuit
Ripple price consolidates in a tight range around $0.50 on Wednesday as the Securities and Exchange Commission (SEC) legal battle against payment-remittance firm Ripple intensifies with two key issues in focus this week.
US inflation and Retail Sales data add to pressure on Fed to signal rate cut
The US CPI report for April was mostly in line with expectations. The annual rate for headline price growth fell to 3.4% from 3.5%, while the core rate declined to 3.6% from 3.8%.