NZD/USD recovers above 0.5950 as NZ two-year inflation expectations rise to 2.12% QoQ in Q4

• NZD/USD gains traction to near 0.5965 in Monday's Asian session. 
• RBNZ two-year inflation expectations increase to 2.12% QoQ in Q4.
• Trump trades might lift the USD and cap the upside for NZD/USD. 

The NZD/USD pair rebounds to around 0.5965 on Monday during the Asian trading hours. The pair edges higher after an uptick in the Reserve Bank of New Zealand's (RBNZ) inflation expectations. However, the renewed Greenback demand due to the return of Donald Trump to the White House might drag NZD/USD lower. The attention will shift to the US October Consumer Price Index (CPI), which is due on Wednesday. 

New Zealand's two-year inflation expectations, seen as the time frame when RBNZ policy action will filter through to prices, increased slightly to 2.12% in Q4 from 2.03% recorded in Q3, according to the Reserve Bank of New Zealand's (RBNZ) latest monetary conditions survey on Monday. Meanwhile, the NZ average one-year inflation expectations dropped to 2.05% in Q4 versus 2.40% prior. The New Zealand Dollar (NZD) attracts some buyers in the immediate reaction to the uptick in inflation expectations.

Nonetheless, analysts expect the US Dollar (USD) to continue its rally against its rivals as Trump's plans might raise inflationary pressures and would lower the chances of sustained US Federal Reserve (Fed) rate cuts next year. "A Trump administration likely means more spending, a hotter economy, and high bars for international trade--all things that spell strength for the dollar," noted Helen Given, associate director of trading at Monex USA.

Additionally, the stronger US economic data continue to underpin the USD. The US consumer sentiment reached a seven-month peak in early November, as the University of Michigan's Consumer Sentiment Index jumped to 73.0 from 70.5 in October. This figure beat the estimation of 71.0 and registered the highest reading since April.