NZD/USD gains momentum above 0.6250 ahead of the New Zealand Building Permits data
- NZD/USD trades in positive territory for the second consecutive day above the mid-0.6200s on Monday.
- The US labor data on Friday helped weaken the case for rate cuts from the Federal Reserve (Fed).
- The stronger Chinese economic data last week has lifted the New Zealand Dollar (NZD).
The NZD/USD pair gains traction during the early Asian session on Monday. The uptick of the pair is bolstered by the softer US Dollar (USD) across the broad. The US inflation data, as measured by the Consumer Price Index (CPI) on Thursday, might offer hints about additional evidence of price pressures. At press time, NZD/USD is trading at 0.6256, gaining 0.19% on the day.
The upbeat US labor data on Friday helps weaken the case for rate cuts from the Federal Reserve (Fed). Traders have moved to bet on five or six rate cuts by the Fed over the course of the year. They are now pricing in a 75% odds of the first cut in March, having fully priced in such a move at the end of last year. US Nonfarm Payrolls (NFP) increased by 216,000 jobs in December from 173,000 in November, above the market consensus of 170,000, the US labor data showed on Friday.
Furthermore, the Unemployment Rate was unchanged at 3.7%. The Average Hourly Earnings climbed 0.4% MoM, better than 0.3% expected, while the annual figure came in at 4.1 YoY in December versus 4.0% in the previous reading, above the consensus of 3.9%.
On the Kiwi front, the stronger-than-expected Chinese economic data last week has boosted the China-proxy New Zealand Dollar (NZD) and acts as a tailwind for NZD/USD. Traders will take more cues from the Chinese data, due later this week. The December Chinese Producer Price Index (PPI) and Consumer Price Index (CPI) will be released on Friday. The upbeat data could provide more support for the Kiwi against the US Dollar.
Market players will focus on the New Zealand Building Permits on Tuesday ahead of the US CPI reports on Thursday. On Friday, the attention will shift to the Chinese CPI and PPI figures. Traders will take cues from these reports and find trading opportunities around the NZD/USD pair.