NZD/USD remains on the defensive below the mid-0.6100s, firmer US PPI boosts US Dollar

• NZD/USD loses ground near 0.6125 amid the firmer USD.
• Strong US economic data strengthened the case for a delay in the Fed rate cuts.
• The New Zealand’s Business NZ PMI arrived at 49.3 in February vs. 47.3 prior.

The NZD/USD pair trades on a weaker note below the mid-0.6100s during the early Asian session on Friday. The downtick of the pair is driven by the strong US Producer Price Index (PPI) data. Meanwhile, the USD Index (DXY) edges higher to fresh multi-session peaks past the 103.00 barrier. NZD/USD currently trades around 0.6125, down 0.09% on the day.

On Thursday, US February Retail Sales rose 0.6% MoM from a downwardly revised -1.1% in January, worse than the expectations of a 0.8% m/m rise. The Retail Sales Control Group was flat at 0% MoM, compared to the previous reading of a 0.3% MoM decline. Furthermore, the February PPI came in better than estimated, rising 0.6% MoM in February from 0.3% MoM in January. The Core PPI figure climbed 0.3% MoM versus a 0.5% gain in January.

The upbeat US economic data followed a rise surprise in the CPI inflation report earlier this week, raising worries about disinflationary momentum in the US. The data also suggest the FOMC will maintain a cautious approach and need to see further data before lowering the interest rate. The possibility of a delay in the Federal Reserve's (Fed) monetary easing cycle boosts the Greenback and

The latest data from Business NZ showed that New Zealand’s Business NZ Performance of Manufacturing Index (PMI) came in at 49.3 in February versus 47.3 prior. The figure showed signs of improvement but was still in the contraction zone. This, in turn, continues to weigh on the Kiwi against the US Dollar.

Moving on, traders will focus on US Industrial Production and the preliminary Michigan Consumer Sentiment, due on Friday. Next week, the FOMC monetary policy meeting will be in the spotlight. Traders will take cues from the data and find trading opportunities around the NZD/USD pair.