The NZD/USD pair is experiencing slight gains, trading around the 0.5600 mark during Wednesday’s Asian trading session. This movement can be attributed to softer-than-anticipated inflation figures from the US Producer Price Index (PPI), which have contributed to a decline in the US Dollar (USD). The US Dollar Index, which gauges the strength of the USD against a variety of other currencies, has fallen to approximately 109.20 following the release of the PPI data. The report indicated a year-on-year increase in the PPI of 3.3% for December, up from 3.0% in November, but still shy of the predicted 3.4%. The core PPI, which excludes the often volatile food and energy prices, rose by 3.5% in December, despite expectations for a higher reading of 3.8%.
Market participants are now focused on the upcoming US Consumer Price Index (CPI) inflation report, scheduled for release later today. A surprising uptick in inflation could bolster expectations for hawkish monetary policy from the Federal Reserve, potentially strengthening the dollar and pushing up US Treasury yields. Furthermore, anticipated graduated tariffs from the new administration could also impact the currency pair.
On the New Zealand Dollar’s side, there are indications that the incoming administration might adopt a more calculated approach to trade tariffs. Reports suggest that any tariffs implemented could occur in a gradual manner, which may offer a degree of support to the NZD. Consequently, traders appear to be reassured by this potential shift in trade policy, which could alleviate some pressure on the New Zealand Dollar and contribute to the current mild gains in the NZD/USD pair.
