NEW ZEALAND DOLLAR EDGES DOWN AGAINST USD AFTER US FACTORY GATE DATA

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  • The New Zealand Dollar declines marginally versus the USD after the release of US data. 
  • Producer Prices in the US rose more than expected in February and lower unemployment claims indicated a stronger labor market. 
  • Retail sales rose less than expected, providing an antidote to the inflationary PPI data. 

The New Zealand Dollar (NZD) is trading lower in its NZD/USD pair on Thursday after the release of US macroeconomic data suggests price pressures are likely to remain above what had been expected. 

Producer Prices (PPI) for February came out higher than economist’s forecasted, according to data from US Bureau of Labour Statistics. It suggests inflation is likely to remain stubbornly high in the US, forcing the Federal Reserve to keep interest rates at their current level for longer, and scotching hopes of an early interest-rate cut.

Higher interest rates are generally positive for a currency because they attract more inflows of foreign capital, so the data weighed on the NZD/USD pair, which measures the buying power of one New Zealand Dollar in US Dollar (USD) terms. 

US Retail Sales came out lower than expected, however, providing an antidote to the higher PPI result, as lower demand for shoppers tends to have a disinflationary effect. 

At the same time, lower-than-expected US Jobless Claims indicated the possibility of inflationary pressures from a tight labor market. 


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