- Uninspiring inflation data from the U.S. weigh on the greenback.
- US Dollar Index slumps to 97.20 area.
- Uncertainty surrounding U.S.-China trade talks keeps pair’s gains limited.
The NZD/USD pair turned north in the early American trading hours and rose above the 0.66 mark supported by the selling pressure surrounding the greenback. As of writing, the pair was up 0.18% on the day at 0.6603.
Earlier today, the U.S. Bureau of Labor Statistics announced that the inflation, as measured by the Consumer Price Index (CPI), rose 0.3% on a monthly basis in April to fall short of the market expectation of 0.4% and ticked up to 2% annually. The core CPI, which strips volatile food and energy prices, came in at 0.1% (MoM) and 2.1% (YoY). Although these figures were mostly in line with expectations, the greenback came under a renewed bearish pressure, sending the US Dollar Index to a weekly low at 97.15. At the moment, the index is down 0.22% on the day at 97.20.
Commenting on the data, “The Fed can rest a little easier waiting for core PCE on May 29th. Core CPI performed as forecast rising to 2.1%. With the US economy expanding at 3.2% in the first quarter the chance of the FOMC lowering rates to counter sub-2% inflation was and is small,” said FXStreet senior analyst Joseph Trevisani.
Despite the USD weakness, however, the pair seems to be having a tough time pushing higher as the investors opt out to stay on the sidelines while waiting for the headlines coming out of today’s trade talks in Washington. According to the latest market chatter, the Chinese delegation is said to return to China this afternoon and today’s negotiations are unlikely to yield a positive outcome.
Technical levels to watch for
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