As Us Inflation Data Is Due, Aussie and NZ DLRS Will Be on Tenterhooks

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On Wednesday, the Australian and New Zealand currencies remained unchanged as investors adopted a wait-and-see attitude before releasing U.S. inflation data later.

The figures could be vital to determining the future trajectory of interest rates from the Federal Reserve, which has kept them close to zero for some time now.

The Australian Dollar (AUD=D3) increased 0.2 per cent to $0.6664, extending its gains from the previous day’s rally and breaking through the resistance level of $0.6680. Despite the rise in value, Tuesday’s rally stalled at this point, and it finished with just a 0.2 per cent gain.

Tapas Strickland, head of market economics at National Australia Bank, said, “It was a quiet session overnight ahead of key risk events later in the week. There was plenty of news flow, but not overly market moving.”

The New Zealand Dollar (NZD=D3) was up 0.1 per cent to $0.6198, dropping 0.4 per cent to as far as $0.6185 overnight, a three-week low. The currency had support at its 200-day average of $0.6160, which kept it from further losses.

Analysts attributed the fall in the value of the NZD to investors looking for safe havens like gold and the U.S. dollar, as well as speculation of more monetary easing from global central banks in response to rising inflationary pressures.

U.S. consumer price data could significantly influence how the Federal Reserve approaches its next meeting in May.

At the moment, investors are keeping a close eye on any developments that may come out of the Fed’s meeting, hoping for more details and insight into their plans for interest rates.

New York Fed President John Williams said recently that the central bank’s policy path would depend mainly on incoming economic data.

Analysts closely watch how U.S. inflation data impacts AUD and NZD pairs as investors try to understand how Fed monetary policy may change.

Regardless of today’s numbers, though, expect both currencies to remain volatile until further clarity is provided from central banks globally regarding their respective monetary policies moving forward.

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