NZD/USD: on the way for a test of 0.68 the figure
NZD/USD has been elevated on slightly calmer markets following the volatility of late and the US stock markets were buoyed by a sentiment that the US and China will indeed find a solution to their ongoing trade dispute. NZD/USD.
CNBC ran the following headlines:
Treasury Secretary Steven Mnuchin and Vice Premier Liu He have reportedly resumed discussions about a possible deal that would ease trade tensions.
Mnuchin and He spoke via phone on Friday, The Wall Street Journal reported.
The US is demanding that China put forth an offer before negotiations on a trade deal can begin, while China would like the discussion to begin before making a formal proposal.
US CPI in focus:
Meanwhile, the next key focus on the economic front will be with the US CPI data. Analysts at Nomura explained that they expect core CPI to increase 0.231% m-o-m (2.192% y-o-y) in October after decelerating in August and September (Consensus: 0.2% m-o-m, 2.2% y-o-y):
"Part of the increase in core CPI inflation will likely be the result of an expected rebound in used vehicle prices as methodological changes introduced increased volatility this year. We forecast a modest 0.1% m-o-m increase in CPI food prices, driven primarily by an expected pickup in prices for food away from home. Energy prices likely increased 1.9% m-o-m on a seasonally-adjusted basis. Altogether, we expect headline CPI to increase 0.352% m-o-m (Consensus: 0.3%), translating to 2.555% on a 12-month basis (Consensus: 2.5%). Our forecast for CPI NSA is 252.965 (Consensus: 252.800)."
NZD has remained elevated since the strong employment report which had sent the bird towards the 0.68 handle. There could be a case for a move back towards 0.68 and then onto the 161.8% extension at 0.6870. A breakout opens the 0.6700 level that guards a break down to the 38.2% fibo retracement of the recent swing lows and highs at 0.6680.