Ella 
NZD/USD has attracted some bulls for the third day in a row on Thursday and now appears to have broken off the previous day’s pullback from around 0.6100, or a more than one-week high. NZD/USD is barely holding above the 0.6100 integer mark in Asia, but bulls will need to proceed with caution in the absence of any follow-through buying ahead of key US macro data.
Later on Thursday, the U.S. will release its preliminary estimate of fourth-quarter gross domestic product, along with durable goods orders and the usual number of U.S. jobless claims last week. Against the backdrop of positive U.S. consumer spending and labor market data released last week, any unexpected improvement in the above-mentioned data will reiterate the view that the U.S. economy is in good shape and further push down expectations of an early interest rate cut by the Federal Reserve (Fed). This would boost the US dollar and be negative for NZD/USD.
However, the market’s immediate reaction is likely to remain limited as focus remains on Friday’s U.S. personal consumption expenditures (PCE) price index. This all-important inflation data will play a key role in influencing market expectations for future policy decisions from the Federal Reserve, thereby driving demand for the dollar. Meanwhile, uncertainty over when the Fed will begin cutting interest rates has kept USD bulls on the defensive below levels not seen since December 13 and provided support for NZD/USD.
Meanwhile, the quarterly inflation report released on Wednesday showed that New Zealand consumer prices remained well above the Reserve Bank of New Zealand’s target of 1% to 3%. This limits the likelihood of a near-term interest rate cut by the Reserve Bank of New Zealand and is seen as another positive factor for NZD/USD, helping it hold above the key 200-day simple moving average (SMA).
