The US CPI Report Sends the New Zealand Dollar Sinking

NZD/USD

The New Zealand Dollar plunged against the USD yesterday after the US CPI data, which sent the NZD/USD pair dwindling by 2.22%, signaling its worst performance since March 2020.

The stickier core gauge surpassed the 56.1% economic expectations strengthening to 6.3% y/y from 5.9% prior. The difference in the headline and core gauge move resulted from the recent fall in energy prices and an increase in housing rates.

All this fostered an aggressive Fed that the market has termed the most hawkish central bank in the world. According to the CME FedWatch Tool, the odds of the Feds tightening rate to a 75 bp rate hike this month is 66%, as a 100-basis point surge is at a probability of 33%.

The Feds continue to pressure the NZD as the US dollar continues to soar. However, despite its dwindling, retail traders continue to buy the NZD, thus boosting the NZD/USD a bit. They have influenced its exposure, and they have cut off bets. Despite this, the market expects the NZD to continue on a downside.

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