NZD/USD retraces its intraday gains despite a subdued US Dollar, struggles near 0.6120

• NZD/USD struggles to snap its losing streak amid a weaker US Dollar.
• US Dollar Index pulls back from its five-week high at 103.69.
• IMF’s first Deputy Managing Director, Gita Gopinath expects rate cuts to be in the second half of 2024.
• New Zealand’s Food Price Index (MoM) declined by 0.1% against the previous fall of 0.2%.

NZD/USD retraces its intraday gains and seems to continue the losing streak for the fourth straight day. The NZD/USD pair trades around 0.6120 during the early European session on Thursday. The US Dollar (USD) corrects from a five-week high at 103.69, particularly due to the subdued US Treasury yields.

The 2-year and 10-year yields on US bond coupons stand at 4.34% and 4.09%, respectively, by the press time. The solid Retail Sales data has even the speculation on the Federal Reserve’s (Fed) interest rate cuts in March, reinforcing the strength of the US Dollar, which in turn, undermines the NZD/USD pair.

On Thursday, the International Monetary Fund’s (IMF) first Deputy Managing Director, Gita Gopinath shared her perspective on inflation and the expectations for interest rate cuts by central banks. Gopinath emphasized the need for central banks to exercise caution when considering interest rate cuts this year. She noted, “Based on the data we have seen, we would expect rate cuts to be in the second half, not in the first half.”

In December, New Zealand’s Food Price Index (Month-over-Month) experienced a modest decline of 0.1%. While this represents a slower pace of decrease compared to November’s 0.2% downturn, it still indicates a continued downward trend.

On Wednesday, Electronic Card Retail Sales (YoY) declined by 0.6% against the previous growth of 2.1%. The monthly purchases made on debit, credit, and store cards also decreased by 2.0% as compared to the previous increase of 1.7%. Friday will bring the Business NZ PMI for December to be published.