NZD/USD appreciates to near 0.6100 as traders await US inflation

• NZD/USD rebounds ahead of US Consumer Price Index (CPI) data scheduled for Thursday.
• The US core CPI is expected to remain steady at 3.4% year-over-year in June.
• The New Zealand Dollar may limit its upside due to dovish sentiment surrounding the RBNZ.

NZD/USD recovers its recent losses, trading around 0.6090 during the European session on Thursday. Traders await the release of the upcoming US Consumer Price Index (CPI) data for June, scheduled for release on Thursday, for more clarity on the Federal Reserve's (Fed) monetary policy direction.

Market forecasts generally predict that the annualized US core CPI for the year ending in June will remain steady at 3.4%. Meanwhile, headline CPI inflation is expected to increase to 0.1% month-over-month in June, compared to the previous flat reading of 0.0%.

Meanwhile, on Wednesday, Federal Reserve (Fed) Chairman Jerome Powell underscored the importance of closely monitoring the labor market, highlighting its significant deterioration. Additionally, Powell expressed confidence in the downward trend of inflation, following his remarks on Tuesday that emphasized the necessity of further data to strengthen confidence in the inflation outlook.

The New Zealand Dollar (NZD) faced pressure following the Reserve Bank of New Zealand's (RBNZ) dovish monetary policy statement. The central bank held its cash rate steady at 5.5% on Wednesday as expected but hinted at possible rate cuts in August if inflation decreases as anticipated.

ING’s FX strategist Francesco Pesole observed, "The Bank displayed greater confidence in disinflation in the statement, noting that 'restrictive monetary policy has significantly reduced consumer price inflation.”

Read the full article: A surprise dovish tilt by the RBNZ – ING