NZD/USD prints a three-day rise close to 0.6150 in advance of US inflation data
NZD/USD grinds upward at a two-week high, after being halted earlier. August figures from the New Zealand REINZ House Price Index and Food Price Index were positive. The risk-on disposition wanes in the face of pre-data apprehension and ambiguous China-related worries. The US CPI will be critical amidst hawkish Fed rhetoric and declining inflation forecasts.

NZD/USD bulls maintain control at the mid-0.6100s, despite the recent sideways grind, as traders await Tuesday's crucial US inflation data. Notable is the fact that the recent improvement in sentiment and statistics from New Zealand, combined with reduced US inflation projections, has weighed on the NZD/USD exchange rate.
The New Zealand REINZ House Price Index improved to -1.3% MoM in August from -1.4% in July, while the Food Price Index surpassed market expectations by 0.6% to reach 1.1% over the same month, compared to 2.1% in July.
According to the New York Fed's monthly consumer expectations survey data issued on Monday, US consumers expected inflation to be 5.75 percent over the next 12 months in August, down from 6.2% in July and the lowest since October 2021. Reuters released additional information indicating that inflation estimates for the next three years averaged 2.8% in August, compared to 3.2% in July.
On Monday, reports that Ukraine is gaining ground in pushing back the Russian military from some of its territories appeared to have bolstered the market's cautious optimism, while also raising concerns of Russia's harsh response, which helped NZD/USD bulls. The expectation of additional stimulus from major economies such as China, the United States, the United Kingdom, and Europe may lie along the same line. In addition, the most recent report from the Wall Street Journal (WSJ) indicating that US gas prices had fallen for the thirteenth straight week also relieved market pressure and boosted the gold price.
Alternately, the current Financial Times (FT) reports indicating conflicting opinions over US President Joe Biden's chip strategy that challenges China appear to test the NZD/USD purchasers. In addition, Chinese President Xi Jinping's desire to restore Beijing's authority on his first foreign trip following covid-led lockdowns appears to contribute to the cautious disposition, since this could exacerbate US-China tensions.
In this context, the risk-on sentiment weighed on the US Dollar Index, as seen by Wall Street's higher closing, which overlooked the positive US Treasury yields. It should be noted that US Treasury yields have reversed recent advances, while S&P 500 Futures have posted modest gains as of press time.
Traders of the NZD/USD will be keenly interested to observe China's comeback following the lengthy weekend. However, the August US CPI will receive the most attention. The projections indicate that the headline number will decrease to -0.1% MoM from 0.0% previously, while the CPI excluding food and energy will likely remain steady at 0.3% MoM. If inflation data are weaker than expected, the NZD/USD pair may have further upside potential.
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