NZD/USD remains range-bound above the 0.6100 mark, eyes on RBNZ Inflation Expectations and US CPI data

• NZD/USD clings to the range-bound theme near 0.6130 on the consolidation of USD.
• Investors trim bets on Fed rate cuts this year, with just 110 basis points (bps) of cuts priced for 2024.
• RBNZ’s Orr emphasized the need to maintain a restrictive monetary policy due to ongoing inflation challenges.
• Traders await the RBNZ inflation expectations data, US CPI data on Tuesday.

The NZD/USD pair sticks to a range-bound trade above the 0.6100 mark during the early Asian session on Tuesday. Traders prefer to wait on the sidelines ahead of the Reserve Bank of New Zealand Inflation Expectations and US Consumer Price Index (CPI) data tonight. The pair currently trades around 0.6130, losing 0.02% on the day.

The robust US economic data might convince the Federal Reserve (Fed) to delay rate cuts. Financial markets have continued to lower expectations for Fed rate cuts this year, with just 110 basis points (bps) of cuts priced for 2024, down from 175 bps projected in early January. Several Fed officials suggested that they want more time to observe whether inflation continues to decline. Minneapolis Fed President Neel Kashkari and Boston Fed President Susan Collins said that the FOMC needs further economic data before lowering interest rates.

The US CPI report will be the highlight on Tuesday. The headline inflation is expected to ease from 3.4% to 2.9% YoY, and the core figure is estimated to drop from 3.9% to 3.7% YoY.

On the Kiwi front, RBNZ governor Adrian Orr said on Monday that the inflation battle was still not over and emphasized broad financial pressure for retaining a “restrictive monetary policy” stance. He further stated that the current inflation rate of 4.7% was still too high and that the board's target is to lower it to around 2%. The RBNZ inflation expectations data will be a closely watched event. If the data supports the case for a rate hike, it might provide some support to the New Zealand Dollar (NZD).

Looking ahead, market players will keep an eye on the RBNZ inflation expectations data ahead of the US CPI inflation data, due later on Tuesday. Later this week, the US Retail Sales will be released on Thursday, and RBNZ’s Orr is set to speak on Friday.