NZD/USD extends gains after soft US PPI, Initial Jobless Claims, on upbeat sentiment

• NZD/USD trading at 0.6378 extends gains vs. the USD, bolstered by recent US inflation data.
• US Producer Price Index (PPI) for June rose by 0.1% MoM, slightly below estimates of 0.2%, indicating slowing factory inflation in the US.
• Initial Jobless Claims in the US for the week ended July 6 were less than expected, suggesting a tight labor market.

The New Zealand Dollar (NZD) extends its gains vs. the US Dollar (USD), spurred by recent inflation data in the United States (US) on the consumer side, registered a solid deceleration. Also, today’s economic docket prompted speculations the Federal Reserve (Fed) is about to end its tightening cycle. At the time of writing, the NZD/USD is trading at 0.6378.

US inflation data spurs speculation about Fed’s tightening cycle, boosting Kiwi

A risk-on impulse favors risk-perceived Forex currencies like the Kiwi (NZD), contrarily to the safe-haven greenback. On Thursday, the US Bureau of Labor Statistics (BLS) delivered inflation and labor market data, crucial for the Fed, which Is expected to lift rates 25 bps at the July meeting. The US Producer Price Index (PPI) for

US Producer Price Index (PPI) for June rose by 0.1% MoM, exceeding May’s 0.4% plunge but was beneath estimates of 0.2%. Annually based, PPI expanded by 0.1%, below forecasts of 0.%. The so-called Core PPI, which strips out volatile items, rose by 0.1% MoM, unchanged from May, and accelerated below estimates of 0.2%. Yearly Core PPI cooled down compared to expectations of 2.6% and came at 2.4%. The data showed the also called factory inflation is slowing down, in tune with Wednesday’s CPI report, which witnessed a 1% drop in CPI towards the 3% threshold.

In other data, the BLS revealed Initial Jobless Claims for the week ended July 6, jumping 237K, below the estimates of 250K, portraying a tight labor market. The Fed’s Beige Book showed that demand for labor “remained healthy” in June, though it noted that hiring “was getting more targeted and selective.”

The NZD/USD reacted upwards to the data, hitting a daily high of 0.6394, before retracing some pips, to current spot prices.

Data on the New Zealand (NZ) front, even though it was weaker, with the manufacturing sector contracting in June to its lowest level since November 2022, it was ignored by investors. Even the latest monetary policy decision of the Reserve Bank of New Zealand (RBNZ) of keeping rates unchanged does little to cramp NZD/USD uptrend.

NZd/USD Price Analysis: Technical outlook

The NZD/USD daily chart portrays the pair as neutral-upwards, threatening to extend its gains past the February 14 swing high at 0.6389, which could put into play 0.6400 if cleared. Once the figure is reclaimed, the NZD/USD yearly high of 0.6538 would be at the brisk of being challenged. Nonetheless, traders must achieve a daily close above 0.6389 to cement the case for higher prices. Conversely, the NZD/USD first support would be the 0.6300 mark. Sellers would keep a close eye, as they would like to test the 200-day EMA at 0.6223, but firstly they must reclaim June 16 daily high turned support at 0.6248, as they eye the 0.6200 barrier.