NZ dollar dips after hot US Producer Price Index

• US PPI jumps 0.6%
• New Zealand Mfg. PMI expected to remain in negative territory

The New Zealand dollar has lost ground on Thursday. In the North American session, NZD/USD is trading at 0.6136, down 0.33%. On Friday, New Zealand releases the Manufacturing PMI.

US Producer Price Index hotter than expected

It was a busy day in the US, and this writer expected that retail sales would be the highlight of the day. In the end, it was the Producer Price Index which stole the show and gave the US dollar a boost after a stronger-than-expected performance.

PPI for February surprised with a gain of 0.6% m/m, up sharply from 0.3% in January and the market estimate of 0.3%. This was the highest rate since August 2023 and the primary drivers of the upswing were increases in the price of goods and energy. On an annualized basis, PPI jumped 1.6%, up from a revised 0.9% in January.

The Federal Reserve is unlikely to get worked up from the headline reading, as core PPI eased to 0.3% m/m, down from 0.5% in January but higher than the market estimate of 0.2%. On an annualized basis, core CPI remained steady at 2%, just above the market estimate of 1.9%.

Retail sales rebounded in February with a gain of 0.6% m/m, following a revised 1.1% decline in January but shy of the market estimate of 0.8%. Retail sales rose 1.5% y/y, after a zero reading in January.

New Zealand will wrap up the week with Manufacturing PMI. The manufacturing sector has struggled and has been mired in negative territory for eleven straight months. Still, there was some improvement in January, as the PMI rose from 43.1 to 47.3, its highest level since June 2023. The upswing is expected to continue in February, with a forecast of 48.1.

NZD/USD Technical

• NZD/USD is testing support at 0.6154. Below, there is support at 0.6092
• There is resistance at 0.6240 and 0.6302

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