Ella 
In early Asian trading on Monday, NZD/USD rose. NZD/USD’s gains are supported by broad weakness in the U.S. dollar (USD). Thursday’s U.S. inflation data may provide a hint of more evidence of price pressures. As of press time, the New Zealand dollar/US dollar was trading at 0.6256, with an intraday increase of 0.19%.
Upbeat U.S. labor data on Friday helped weaken the case for the Federal Reserve to cut interest rates. Traders have instead bet that the Federal Reserve will cut interest rates five to six times during the year. Markets are currently pricing in a 75% chance of a first rate cut in March, having already fully priced in a rate cut at the end of last year. U.S. labor force data released on Friday showed that U.S. non-farm payrolls (NFP) increased by 216,000 jobs in December from 173,000 in November, which was 170,000 higher than expected.
Additionally, the unemployment rate was flat at 3.7%. Average hourly earnings rose 0.4% monthly, better than the 0.3% expected; the annual rate in December was 4.1, compared with the previous value of 4.0%, higher than the market consensus of 3.9%.
On the NZD side, last week’s stronger-than-expected Chinese economic data boosted China’s proxy currency NZD/USD and posed a tailwind to NZD/USD. Traders will get more clues from Chinese data due later this week. China’s producer price index (PPI) and consumer price index (CPI) for December will be released on Friday. Better economic data from China will boost NZD/USD.
Ahead of Thursday’s U.S. inflation release, focus will turn to New Zealand building approvals on Tuesday. On Friday, attention will shift to China’s inflation and producer price index. Traders will look for NZD/USD trading opportunities from these reports.
