Ella 
In early Asian trading on Friday, the New Zealand dollar/US dollar fluctuated and weakened, and was below the mid-range of 0.6100. NZD/USD’s decline was driven by strong US Producer Price Index (PPI) data. Meanwhile, the U.S. dollar index (DXY) moved higher to fresh multi-session highs, breaking above the 103.00 mark. NZD/USD is currently trading around 0.6125, down 0.09% on the day.
On Thursday, U.S. retail sales rose 0.6% monthly in February, down from a downwardly revised 1.1% increase in January and weaker than expectations of 0.8%. The retail sales control group’s monthly rate was flat at 0%, compared with the previous value of -0.3% monthly. Additionally, the producer price index came in at a better-than-expected 0.6% monthly rate in February, compared with 0.3% in January. Core producer price index rose 0.3% on the month, compared with a 0.5% gain in January.
The improvement in U.S. economic data follows an unexpected rise in inflation data earlier this week, sparking concerns about U.S. deflation. Economic data also suggest that the Fed will remain cautious and will need to watch further economic data before cutting interest rates. The U.S. dollar and euro were boosted by a possible monetary easing cycle by the Federal Reserve.
The latest data from Business NZ shows New Zealand’s manufacturing purchasing managers index (PMI) was 49.3 in February, compared with the previous reading of 47.3. The data showed signs of improvement but remained in contraction territory. This therefore continues to weigh on NZD/USD.
