Ella 
The NZD/USD has attracted some bulls in early Asian trading on Monday. Investors are awaiting New Zealand’s Consumer Price Index (CPI) data due later on Monday. New Zealand’s CPI is expected to have risen 2.0% quarter-on-quarter in the third quarter, and 5.9% year-on-year. The NZD/USD is currently trading at 0.5909, up 0.35% on the day.
The latest data from New Zealand on Monday showed that the country’s business services index came in at 50.7 in September, up from the previous reading of 47.1. Last week, New Zealand’s purchasing managers’ index fell to 45.3 from 46.1 the previous month.
The Reserve Bank of New Zealand committee agreed that interest rates may need to remain at restrictive levels for longer. However, New Zealand’s inflation data to be released at 5:45 p.m. Beijing time on Tuesday may provide a signal for the Reserve Bank of New Zealand’s future interest rate policy.
On the other hand, the preliminary reading of the U.S. Michigan Consumer Confidence Index released on Friday fell to 63.0 from the previous reading of 68.1, which was lower than the expected reading of 67.4. At the same time, one-year inflation expectations rose to 3.8% from 3.2% and five-year inflation expectations rose to 3% from 2.8%. With inflation expectations rising and inflation data improving, investors expect the Federal Reserve to raise interest rates before the end of the year. The U.S. Consumer Price Index for September was 3.7% on an annual basis and 0.4% on a monthly basis. This could boost the US dollar (USD) and weigh on the NZD/USD.
Meanwhile, escalating geopolitical tensions between Israel and Palestine could drive safe-haven flows into the US Dollar and be bearish for the NZD/USD. On Sunday, Israeli Prime Minister Benjamin Netanyahu vowed to “destroy Hamas” as his troops prepared for a ground operation in Gaza to root out the militant group.
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