- NZD/USD is oscillating around 0.6090, upside remains favored on weaker DXY.
- China’s inflation has declined to 2.8% vs. 2.8% of expectations on an annual basis.
- The commentary from US Secretary Yellen has trimmed forecasts for US CPI data.
The NZD/USD pair has concluded the time-based correction after a stellar performance in the Asian session. The asset has witnessed a sheer upside and is oscillating around 0.6080. The major is gearing up for more upside which will be witnessed after overstepping the round-level resistance of 0.6100. The asset has not responded well to the higher-than-expected China’s Consumer Price Index (CPI) data.
China’s CPI has landed at 2.5%, lower than the expectations and the prior release of 2.8% and 2.7% respectively on an annual basis. While the monthly figure is negative by 0.1% against 0.2% of expectations and 0.5% of former release. A decline in China’s inflation will force the People’s Bank of China (PBOC) to sound dovish and trim the Prime Lending Rate (PLR) further. And, more liquidity flush into the economy will spurt the volumes in economic activities.
It is worth noting that New Zealand is a leading trading partner of China and higher economic activities in China will accelerate kiwi exports and will strengthen their Trade Balance further.
The Stats NZ reported bumper Electronic Card Retail Sales in the early Tokyo session. The economic data increased by 26.9% against a decline of 0.5% on an annual basis. Also, the monthly data improved by 0.9% against a shrink of 0.2% released for June.
Meanwhile, the US dollar index (DXY) is plunging ahead of the inflation data. The DXY has slipped to near 109.10 and is expected to display more weakness. The comments from US Treasury Secretary Janet Yellen on the inflation rate, citing that weaker gasoline prices may put further downward pressure on headline consumer price inflation for August, reported by Reuters. This has weakened the DXY on expectations of a decline in inflation ahead.