The NZD/USD pair continues to rebound from the weekly low below 0.6200, extending its upward trajectory for the second consecutive day during the early European session on Friday. Current spot prices hover around the mid-0.6200s, nearing the upper end of the weekly range.
The National Bureau of Statistics’ report revealing China’s consumer prices remaining in deflation for the third consecutive month in December, alongside a 15th straight month of decline in the Producer Price Index (PPI), has fueled speculation about additional government stimulus. This, in turn, has provided a modest boost to antipodean currencies, including the New Zealand Dollar (NZD).
Amidst this, the US Dollar (USD) remains within a familiar range, maintaining stability over the past week due to uncertainty surrounding the Federal Reserve’s interest rate trajectory. This factor, coupled with diminishing odds for a more aggressive policy easing, supports the NZD/USD pair. However, the US Treasury bond yields, influenced by geopolitical risks, keep any potential losses for the safe-haven Greenback in check.
Concerns persist regarding the economic conditions in China, as weaker-than-expected import growth in December suggests ongoing challenges in domestic demand, despite optimistic export figures indicating a gradual global trade recovery.
The NZD/USD pair’s recent range-bound performance, coupled with the mixed fundamental backdrop, suggests a cautious approach, with traders awaiting strong follow-through buying before considering fresh bullish positions. Market participants are keenly watching the upcoming release of the US Producer Price Index (PPI) and a scheduled speech by Minneapolis Fed President Neel Kashkari during the North American session for potential market impetus.
