Ella 
In early Asian trading on Wednesday, NZD/USD rose above 0.5900. NZD/USD was boosted by a drop in the greenback ahead of the release of the US Consumer Price Index (CPI). Meanwhile, the U.S. dollar index, which measures the greenback’s value against a basket of global currencies, was hovering around 104.50 after retracing from a high of 104.90.
The latest data released by Statistics New Zealand on Wednesday showed that New Zealand’s food price index increased by 0.5% on a monthly basis in August, while the previous value fell by 0.5%. Earlier this week, New Zealand’s electronic card retail sales increased at an annual rate of 3.7% in August from 2.2% in the previous month and at a monthly rate of 0.7% from 0% in the previous month. The annual rate of tourist arrivals in July was 59.3%, compared with 88.5% in the previous month. However, following the release of the above data, the NZD/USD fluctuated little, and headlines about Sino-US relations and China’s economic conditions will temporarily affect the NZD/USD fluctuations.
Separately, U.S. Commerce Secretary Gina Raimondo will meet with CEOs of major U.S. companies this week, Reuters reported, two weeks after her visit to China raised concerns about U.S.-China trade relations. . Renewed US-China trade war tensions could put some selling pressure on NZD/USD and be negative for the NZD as a proxy for China.
On the U.S. dollar front, the U.S. dollar may benefit from a statement that U.S. interest rates will remain high for a longer period. Traders see a 93% chance that the Federal Reserve (Fed) will keep interest rates unchanged at 5.25%-5.50% in September, according to the CME FedWatch tool. However, markets have put the probability of the Fed keeping current monetary policy unchanged at its November meeting at 56%.
On Wednesday, the U.S. Consumer Price Index (CPI) for August will become the focus of market attention. Inflation is expected to rise to an annual rate of 3.6% from 3.2%, while core inflation is expected to decline to an annual rate of 4.3% from 4.7%. The data could trigger volatility in foreign exchange markets and affect expectations for the Federal Reserve’s monetary policy.
Next, market participants will pay close attention to Wednesday’s U.S. Consumer Price Index (CPI) data. On Thursday, U.S. retail sales and producer price index will be released. Separately, New Zealand’s August Business Purchasing Managers’ Index will be released on Friday. These data could bring clear direction to the NZD/USD pair.
