Ella 
NZD/USD rallied for a second straight session on Friday, with Asia rising to around 0.6250. U.S. inflation data was positive, but NZD/USD found upside support on improving market risk appetite as traders bet on speculation of interest rate cuts from the Federal Reserve (FED) in March and May.
In December, China’s consumer price index recorded an annual rate of -0.3%, compared with expectations of -0.4%. The consumer price index slowed more modestly on a monthly basis to 0.1%, versus market expectations of 0.2%. Meanwhile, the Producer Price Index fell 2.7% on an annualized basis, slightly above expectations of 2.6%.
In addition, China’s December trade balance in US dollars increased to US$75.34 billion from the previous value of US$68.39 billion, which was better than the expected US$74.75 billion. The annual export rate was 2.3%, lower than the expected value of 1.7%. Meanwhile, imports in yuan terms increased at an annual rate of 1.6% from the previous value of 0.6%. Traders further looked ahead to U.S. Producer Price Index (PPI) data for December, seeking to gain more insight into the state of the U.S. economy.
The U.S. dollar index extended its recent gains in early Asian trading on Friday after positive U.S. inflation data. However, the U.S. dollar index edged lower to around 102.20 despite improvements in U.S. Treasury yields. As of press time, the two-year U.S. Treasury yields and the 10-year U.S. Treasury yields were 4.26% and 3.97% respectively.
In addition, better U.S. inflation data also boosted the dollar to a certain extent. The U.S. consumer price index increased at an annual rate of 3.4% in December, exceeding November’s 3.1% and the expected 3.2%. Inflation was 0.3% monthly in December, higher than expected at 0.2%. Core inflation fell to 3.9% annually from 4.0% in the previous month, while the monthly rate held at 0.3%, in line with expectations.
