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NZD/USD recovered recent losses and was trading around 0.6090 during the European session on Thursday. Traders are awaiting U.S. consumer price index (CPI) data for June to be released on Thursday for further clarity on the direction of the Federal Reserve’s (Fed) monetary policy.
Consensus forecasts see U.S. core CPI remaining at around 3.4% on an annual basis through June. Meanwhile, overall monthly CPI inflation is expected to rise to 0.1% in June from a flat 0.0% in the previous month.
Meanwhile, Federal Reserve Chairman Jerome Powell on Wednesday stressed the importance of keeping a close eye on the labor market, highlighting that it was deteriorating significantly. In addition, Powell also expressed confidence in the downward trend of inflation, having previously emphasized in his speech on Tuesday that further data is needed to increase confidence in the outlook for inflation.
The New Zealand dollar (NZD) is under pressure following a dovish monetary policy statement from the Reserve Bank of New Zealand (RBNZ). The central bank kept the cash rate steady at 5.5% on Wednesday as expected, but signaled a rate cut could come in August if inflation falls as expected.
Francesco Pesole, currency strategist at ING, noted: “The central bank showed greater confidence in deflation in its statement, noting that ‘restrictive monetary policy has Reduced consumer price inflation.
