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NZD/USD is sensing heat in climbing above the 0.6240 resistance despite a firmer appeal for risk-sensitive assets.
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In an already bloated environment, New Zealand Prime Minister Hopkins’ promise of a cyclone relief package will worsen the situation.
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An upbeat US labor market and consumer spending could propel the US PCE Inflation data.
The NZD/USD pair is facing barricades in overstepping the immediate resistance of 0.6240 in the Tokyo session. Earlier, the Kiwi asset displayed a solid rebound from the round-level support of 0.6200 as investors shrugged off hawkish Federal Reserve (Fed)-inspired volatility.
The asset is likely to remain directionless as investors are awaiting the release of the United States Personal Consumption Expenditure (PCE) Price Index for fresh cues. The US Dollar Index (DXY) is demonstrating signs of volatility contraction amid a mixed market mood. The recovery moves from the risk-sensitive assets are bizarre in comparison with the price action by the USD Index.
S&P500 futures have recovered their entire losses as investors have stopped worrying about higher rates by the Fed for a longer period in its battle against persistent inflation. Accordingly, the 10-year US Treasury yields have dropped further below 3.87%.
New Zealand Prime Minister (PMI) Chris Hipkins’ recent promise of a cyclone relief package has fueled inflation estimates. It is worth noting that New Zealand’s economy is already suffering from hyperinflation and now more temptation inflation is making the situation more vulnerable.
Regarding interest rate projections, Reserve Bank of New Zealand (RBNZ) Assistant Governor, Karen Silk cited “The projected cash rate peak is not set in stone.” He further added that all rate hike options are on the table for the April meeting and the RBNZ will do all it takes to control inflation.
The week is expected to end with a power-pack action propelled by the release of US PCE Inflation data. The street is expecting a rebound in the price pressures as the US labor market is getting stronger each day and households’ spending has recovered dramatically.
