Search ForexCrunch
  • NZD/USD rises over 20 pips as NZ Q4 CPI came in better-than-expected.
  • Market sentiment stays upbeat despite recent jitters concering virus and China.
  • WSC cools down, US 10-year Treasury yields rise but the DXY stays on the back foot.
  • Aussie Retail Sales, risk catalysts will be the key.

NZD/USD takes the bids near 0.7220 as strong New Zealand (NZ) Consumer Price Index (CPI) propels the kiwi pair during the early Asian session on Friday. In doing so, the quote not only reversed the previous pullback but also prints a four-day winning streak.

NZ CPI rose past-0.0% forecast to 0.5% QoQ in the fourth quarter (Q4).On the yearly basis, the inflation data reprinted 1.4% figures versus 1.1% market consensus. With the key inflation figures suggesting less pressure on the RBNZ to recheck their cautious optimism, NZD/USD responds with a jump in prices following the release.

Read: NZ CPI: 1.4% YoY 0.5% QoQ, beats expectations, NZD/USD bid

Other than the data, the market’s mood also favors the quote’s upside as US President Joe Biden is in full mood to keep his fiscal stimulus promise while China also stays ready for further easing.

It should, however, be noted that incoming Treasury Secretary Janet Yellen’s readiness to keep the pressure on Beijing and the dragon nation’s latest sanctions on 28 US policymakers, former ones, probe the risks. Also on the negative rise are the worries that the coronavirus (COVID-19) will take more lives and the vaccinations won’t be easy.

Additionally, the European Central Bank’s (ECB) hawkish halt and mixed data from the US also contributed to the previous pullback in the NZD/USD prices.

Amid these plays, Wall Street benchmarks closed in mixed after S&P 500 refreshed intraday record top while the US 10-year Treasury yields rose 1.5 basis points (bps) to 1.10% by the end of Thursday’s trading.

Having seen the initial response to the NZ CPI data, NZD/USD traders may strengthen their optimism concerning the Reserve Bank of New Zealand’s (RBNZ) next move as the figures don’t push the central bank towards unwelcomed easing. Though, the US dollar moves and the Fed’s path will be the key to observe. For the immediate direction, preliminary readings of Australia’s Retail Sales for December, prior 7.1%, will be the key while risk catalysts concerning the virus, China and US policies shouldn’t be ignored.

Technical analysis

Unless declining back below the previous resistance line from January 06, at 0.7175, NZD/USD bulls can keep 0.7240/45 upside area, comprising multiple highs marked since December 31, 2020, on the table.