NZD/USD rallies back into the 0.6000 level with US PPI, Retail Sales around the corner

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• The NZD/USD has bounded back into the top end after broader markets went risk-on.
• Tuesday saw safe havens go broadly lower as investors stepped out post-US CPI.
• Up Next: US PPI, Retail Sales slated for Wednesday.

The NZD/USD has ripped higher after gaining almost 2.6% from Tuesday’s lows. The Kiwi (NZD) saw its single best trading day against the US Dollar (USD) since July of this year as broad-market risk appetite roared back following a US Consumer Price Index (CPI) inflation reading that came in below expectations.

US inflation appears to be easing at a faster rate than market participants anticipated ahead of the US CPI print, and the decline in headline inflation sent the Greenback broadly lower across the board. 

US CPI inflation softens to 3.2% vs. 3.3% forecast

Month-over-month headline US CPI in October printed at a flat 0.0%, coming in below the forecast 0.1% and dipping even further from the previous month’s print of 0.4%.

With inflation measures falling past forecasts, investors are seeing hopes of the Federal Reserve (Fed) getting pushed off their “higher for longer” hawkish perch and will see an accelerated timeline for beginning the next rate cut cycle.

Forex Today: US inflation slows, Dollar tumbles

Next up on the economic calendar data docket will be US Producer Price Index (PPI) and Retail Sales numbers.

Core US PPI for the year into October is expected to print flat at 2.7%, in-line with September’s annualized reading, while US MoM Retail Sales are forecast to see a sharp turnaround from September’s 0.7% growth. Median market forecasts see October’s monthly Retail Sales number printing at -0.3%.

NZD/USD Technical Outlook

Despite the Kiwi’s firm bounce to reclaim the 0.6000 major handle on Tuesday, the NZD/USD remains under significant technical pressure. Price action continues to waffle below the 200-day Simple Moving Average (SMA) currently dropping into 0.6100, and the immediate ceiling on an bullish extension sits at early October’s swing high into the 0.6050 level.

Swing lows on the daily candlesticks have begun to chalk out a technical support zone from 0.5800 to 0.5900, but the 50-day SMA continues to draw in bids, trapping prices into downside momentum near the 0.5900 handle.

NZD/USD Daily Chart

NZD/USD Technical Levels