NZD/USD AIMS TO RECAPTURE 0.6230 AS RISK APPETITE IMPROVES, CHINA INFLATION EYED

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Going forward, the release of the United States inflation data will provide more clarity on Fed’s interest rate guidance. The street is anticipating that weaker oil prices in March would result in further softening of headline inflation. However, core inflation could be sticky further due to solid labor demand.


Economists at BBH expect “Headline inflation at 0.2% m/m and 5.1% y/y vs. 0.4% m/m and 6.0% y/y in February.  A core is expected at 0.4% m/m and 5.6% y/y vs. 0.5% m/m and 5.5% y/y in February.” 


On the New Zealand front, investors are awaiting the release of China’s inflation data. Annual inflation is expected to remain steady at 1% while the monthly figure would accelerate by 0.1% vs. a contraction of 0.5% reported earlier. This indicates that the retail demand is in a recovery mode, which will improve the overall economic outlook.


It is worth noting that New Zealand is one of the leading trading partners of China and the solidification of China’s economic prospects will also support the New Zealand Dollar.

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