Ella 
The NZD/USD pair attracted some sellers, trading as low as 0.6012 during the Asian morning session on Friday, near multi-month lows. Markets turned cautious ahead of the release of top U.S. data during the U.S. session. The data could trigger volatility in NZD/USD later in the day.
The U.S. Bureau of Labor Statistics (BLS) reported on Thursday that the U.S. consumer price index (CPI) rose to 3.2% year-on-year in June from 3% in June. The figure was below the consensus estimate of 3.3%. The core CPI figure, which strips out volatile food and energy prices, fell to 4.7% from 4.8%. In addition, US initial jobless claims rose to 248,000, beating expectations for 230,000. The U.S. dollar reversed course on the data and strengthened against its rivals.
Beyond that, Fed San Francisco chairwoman Mary C. Daly said on Thursday that there is still a lot of information to evaluate and that it is too early to predict whether additional rate hikes or long-term maintenance of rates will be needed. This in turn limits NZD upside and is bearish for NZD/USD.
In Kiwi, New Zealand quarterly inflation expectations came in at 2.83% from 2.79% previously. New Zealand business PMI fell to 46.3 vs. 49.4 expected. A recent Reuters poll showed most analysts expect the Reserve Bank of New Zealand (RBNZ) to keep interest rates at a 14-year high of 5.50% for the second time at its Aug. 16 meeting.
Meanwhile, rising U.S.-China trade war tensions could weigh on the New Zealand dollar, a proxy currency for China’s economy. U.S. President Joe Biden on Wednesday issued an executive order banning new U.S. investments in sensitive technologies in China. The U.S. government intends to target only those Chinese companies that derive more than 50 percent of their revenue from quantum computing and artificial intelligence (AI). However, the restrictions would apply to a “narrow subset” of the three areas, but the U.S. government has provided no further details and the proposal is open for comment.
Looking ahead, market participants will be closely watching the release of the U.S. producer price index (PPI) later in the day. Year-on-year growth in the figure is expected to rise to 0.7% from 0.1%. In addition, the US session will release the University of Michigan (UoM) consumer sentiment survey. These data are crucial in determining a clear direction for NZD/USD.
