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NZD/USD holds above the 0.5900 area amid losses in US Treasuries.
Concerns about deflation in China are fading as China’s inflation data rose in August.
Positive U.S. economic data last week provided support for the prospect that the U.S. will maintain high interest rates for a long time.
Traders will keep a close eye on the U.S. Consumer Price Index.
In early Asian trading on Monday, NZD/USD regained some lost ground and regained the 0.5900 mark. No U.S. economic data was released, and U.S. bond yields fell, putting pressure on the U.S. dollar and providing support for the NZD/USD currency pair. NZD/USD is currently trading around 0.5901, up 0.31% on the day.
Statistics New Zealand reported last week that manufacturing sales in New Zealand increased by 2.9% in the second quarter, compared with -2.1% in the previous quarter. In addition, the ANZ Commodity Price Index fell to -2.9% in August from -2.6% in July. New Zealand’s terms of trade index rose to 0.4% in the second quarter, compared with -1.5% in the previous quarter and -1.3% expected.
In addition to this, market concerns about deflation in China have also been dispelled as China’s inflation data improved in August. This in turn boosts the NZD/USD exchange rate on behalf of China. Data released last Saturday showed that China’s consumer price index in August recorded an annual rate of 0.1%, compared with the previous value of -0.3%, which was weaker than expected by 0.2%. Inflation came in at 0.3% monthly, in line with expectations. Finally, the producer price index (PPI) annual rate in August was -3.0%, compared with the previous value of -4.4%, in line with expectations.
In the United States, positive economic data last week provided support for the United States to maintain high interest rates for a long time. Markets have set a 93% chance of keeping rates on hold at the September meeting and a 43.5% chance of a Fed rate hike in November, according to the CME Group’s FedWatch tool. The Fed’s continued hawkish stance could boost the US dollar and weigh on NZD/USD.
Later this week, U.S. consumer price index and retail sales for August will be released on Wednesday and Thursday respectively. No important economic data was released in New Zealand. However, Chinese retail sales and industrial production data released on Friday could have an impact on NZD/USD. Traders will look to this data for NZD/USD trading opportunities.
