NZ Dollar Unable to Maintain Rally, Fails to Get Support from Positive Sentiment & Macroeconomic Data

The New Zealand dollar performed the same way as its Australian counterpart today: rising initially but retreating later. That is despite the supportive market sentiment and positive domestic macroeconomic data.
The Reserve Bank of New Zealand reported that inflation expectations for the next two years increased from 1.59% in the December quarter of 2020 to 1.89% in the March quarter of 2021. The inflation outlook was improving consistently since the June quarter of 2020.
Markets were trading in a risk-on mode during Tuesday’s session. The main reasons for the investors’ optimism were the news about coronavirus vaccines and the outlook for fiscal stimulus in the United States. The positive traders’ mood was supporting riskier commodity currencies initially but, for whatever reason, has stopped doing so after a while.
Going forward, the New Zealand currency will continue to react to shifts in the market sentiment. As for macroeconomic data, this week is extremely light in terms of macro releases. Tomorrow, China, New Zealand’s biggest trading partner, will release reports on consumer and producer prices. Experts predicted that the Consumer Price Index will show a flat reading for January, year-on-year, slowing from the previous month’s 0.2% rate of growth. The Producer Price Index is expected to show an increase of 0.3% after a drop of 0.4% registered in December.
NZD/USD rallied from 0.7217 to 0.7246 as of 8:53 GMT today. EUR/NZD opened at 1.6670, fell to the daily low of 1.6650 but bounced to 1.6687 later. NZD/CAD was up from 0.9191 to 0.9219, and its daily high was at 0.9232. NZD/CHF traded at 0.6487 after opening at 0.6482 and rising to the session maximum of 0.6503.
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Original from: www.earnforex.com