NZD/USD rides AUD/USD’s coattails, gets set for US CPI next week
- NZD/USD popped and dropped in the US session.
- All eyes point to the US data next week.
NZD/USD traded in a similar fashion to the Aussie on Thursday, which technicals are shown here. Ahead of the Wall Street close, the Kiwi is trading around 0.3% lower on the day at 0.6328 and has fallen in the New York session within a range of 0.6389 and 0.6302.
NZD/USD and AUD/USD both dropped when the London fix and Wall Street’s cash open kicked in, propelling the price below higher timeframe traders’ fresh long positions up high on the day. In the case of the Kiwi, bulls chasing the breakout above 0.6370 were put under heat straight away as the price fell sharply towards the 0.6350s.
On the day, the US dollar was being thrown around, initially offered and breaking structure in the case of the DXY index as follows:
However, the bulls moved in:
The labour market has not been what the Federal Reserve is hoping for and Thursday’s Jobless Claims revealed risks of a tighter for a longer scenario given there was only a small uptick in unemployment numbers. ”Initial Jobless Claims lifted to 196k in the week to February 4, while Continuing Claims also lifted.
”The weekly jobless claims data can bob about so one reading does not indicate a trend. The total number of jobless claims at present is also still quite low,” analysts at ANZ Bank argued.
Meanwhile, looking ahead to the week, the US inflation Consumer Price Index is due to be released and the data is expected to show headline inflation for January at 0.5% MoM and core inflation running at 0.3% MoM. ”If these numbers are achieved this would result in an easing of core inflation from 5.7% to 5.4% YoY and headline inflation from 6.6% to 6.2%,” the analysts at ANZ Bank explained, noting also Retail Sales and manufacturing data er due.
”If we continue to see strength in these data, then it will be very difficult for Federal Reserve policymakers to signal anything other than a further tightening of monetary policy.”