Nzdusd Gains Momentum

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Nzdusd Gains Momentum

Nzd/Usd Gains Momentum Above 0.6060

The NZD/USD is gaining bullish momentum above the 0.6060 handle during Wednesday's trading session. If the NZD/USD manages to close higher, it will mark the 2nd day of consistent gains.

For now, the NZD/USD is holding above the 100 EMA as the DXY has just dipped below the 105 on USD selling. It appears that the spotlight for the NZD/USD will be the release of the Retail sales and CPI (April).

Persistent Inflation Could Delay Rate Cuts

Meanwhile, Jerome Powell talked about persistent inflation and how it will stay above the 2% target for a long time. He also commented that it doesn't automatically mean rate hikes at this stage, but it does affect the timing of the rate cuts.

Investors still believe in a September rate cut as the odds are still standing at 65%, according to the FedWatch tool. However, that percentage will change once retail sales and CPI data are released.

The PPI (USA) was released yesterday, which shows that wholesale inflation is now at its highest level in a year. Overall, a 2.2% jump was seen in PPI during April against March's 1.8% reading, which is a big surprise for most market players.

The Core PPI also showed a jump of 2.4% during the same period, while the earlier reading was 2.1%. Overall, the inflation situation during April will be closely watched by the Fed as they are using it to shape the monetary policy.

According to experts, a hotter-than-expected inflation reading in the USA will serve as the basis for a delay in the rate cuts this year.

On the New Zealand side, the RBNZ meeting is scheduled for this week, but analysts believe that the central bank will make no changes to the interest rate. This means a 5.5% interest rate (OCR) will remain in effect in New Zealand, which bodes well for the Kiwi.

The market still believes in the theory that the RBNZ will only start to ease its policy rate after the Fed. So, if this turns out to be true, it means more upside for the NZD/USD.

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