NZD/USD trades higher for second day near 0.6150, focus on US CPI data

• NZD/USD gains momentum as the US inflation is expected to ease.

• US Dollar faces a challenge on downbeat US bond yields.

• Investors expect no interest rate change by the Federal Reserve.

NZD/USD gained ground for a second straight trading day, bidding around 0.6150 during Asian hours on Tuesday. The US dollar (USD) turned negative on US Treasury yields ahead of the US Consumer Price Index (CPI) scheduled for release later in the North American session. Annual US Consumer Price Index (CPI) data is expected to ease, with US Core CPI expected to remain consistent.

The US Dollar Index (DXY) is trading near 103.90 at the time of writing. 2-year and 10-year US bond coupon yields were lower at 4.68% and 4.19%, respectively. However, solid labor data from the previous week bolstered the greenback as strong economic conditions in the United States (US) sparked debate over how long the Federal Reserve (Fed) would keep interest rates high.

However, the Fed is not expected to adjust policy rates at its December meeting but markets are pricing in expectations of a 25 basis point (bps) rate cut as early as March next year, which is helping to underpin the NZD/USD pair.

Meanwhile, on Kiwi’s economic agenda, Statistics New Zealand will release third-quarter gross domestic product (GDP) data on Thursday. Estimates suggest a 0.2% increase, a decline from the previous quarter’s 0.9% expansion. Annual growth is expected to decelerate significantly to 0.5% from the previous 1.8% growth. Additionally, Business NZ will release the Performance of Manufacturing Index (PMI) on Friday.