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In the Asian session, the NZD / USD pair has extended its correction below 0.6220. As investors grow anxious in advance of the release of the United States Consumer Price Index (CPI) data, the New Zealand dollar is anticipated to exhibit extreme volatility in the near future.

After an unexpected increase in the number of payrolls generated in the US economy in February and a less-than-anticipated increase in Average Earnings, an increase in inflationary pressures cannot be ruled out. However, the consensus indicates a decrease in the headline CPI to 6.0% from the previous release of 6.4%. And, compared to the previous release of 5.6%, core inflation, which excludes crude and food prices, is anticipated to moderate slightly to 5.5%.

The US Dollar Index (DXY) has recovered to near 103.80, which appears to be a retracement after a steep decline. MUFG Bank economists believe that only a significant favorable surprise in US inflation could propel the US Dollar forward. S&P500 futures are indicating a reasonable recovery as investors disregard the volatility associated with the collapse of Silicon Valley Bank (SVB). In addition, demand for US government bonds has decreased, resulting in a rise in 10-year US Treasury yields above 3.55%.

On the New Zealand Dollar front, investors await the publication of Gross Domestic Product (GDP) (Q4). According to estimates, the New Zealand economy has shrunk by 0.2% compared to the 2.0% growth seen in the third quarter. The annual GDP (Q4) grew by 3.3%, which is less than the previous expansion of 6.4%.

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