• NZD/USD drops to the lowest levels in three months, grinds near intraday low of late.
• Downbeat NZ Retail Sales, comments from RBNZ’s Conway keep bears hopeful.
• US Dollar cheers strong inflation clues, hawkish Fed talks amid upbeat yields.
• US Durable Goods Orders, risk catalysts eyed for fresh impulse.

NZD/USD bears keep the reins at the lowest levels since November 2022, down half a percent near 0.6130 during early Monday, as downbeat New Zealand (NZ) catalysts contrast with the US Dollar demand.

That said, NZ Retail Sales marked -0.6% QoQ figure for the fourth quarter (Q4) earlier in the day, versus 1.5% expected and 0.4% prior.

On the other hand, Reserve Bank of New Zealand (RBNZ) Chief Economist Paul Conway said, “As interest rates rise, I expect consumption to slow.”

Meanwhile, strong US inflation-linked data joined the Fed policymakers’ support for higher rates to propel the Fed fund futures to above 5.30%, versus 5.10% expected by the US central bank in December. The same joins the latest bout of sanctions on Russia from the West to escalate the market’s fears of more geopolitical tension, which in turn underpins the US Dollar’s haven demand.

US Dollar Index (DXY) renews its intraday high around 105.32 following the initial pullback from a seven-week high, while tracing upbeat US Treasury bond yields. It’s worth noting, US 10-year Treasury yields reverse the early-day losses to around 3.95%. Further, the two-year counterparts jump back towards the highest levels since November 2022, marked the previous day, as bond bears poke the 4.83% level by the press time. Further, the S&P 500 Futures lick its wounds with mild gains after the Wall Street benchmark posted the biggest weekly slump of 2023.

Moving ahead, the US Durable Goods Orders for January, expected -4.0% versus 5.6% prior, will be important to watch for clear directions ahead of Wednesday’s official activity data from China.