NZD/USD trades with mild gains above 0.5900 after New Zealand's CPI data

• NZD/USD posts modest gains to around 0.5935 in Thursday's early Asian session.  
• New Zealand CPI inflation rose to 2.5% YoY in Q1 as import costs rose. 
• Traders keep betting on Fed rate reductions this year, starting in June. 

The NZD/USD pair extends the rally to near 0.5935 during the early Asian trading hours on Thursday. The New Zealand Dollar (NZD) edges slightly higher against the US Dollar (USD) after the hotter inflation data. The US Building Permits, Housing Starts, the Philly Fed Manufacturing Index, and the weekly Initial Jobless Claims will be published later on Thursday. 

Data released by Statistics New Zealand on Thursday showed that the country's Consumer Price Index (CPI) rose 2.5% YoY in the first quarter (Q1) of 2025, compared with the 2.2% increase recorded in the fourth quarter of 2024. This reading came in hotter than the expectation of 2.3%. Meanwhile, the quarterly CPI inflation climbed to 0.9% in Q1 from the previous reading of 0.5% and above the market consensus of 0.7%.

The inflation figures were somewhat higher than the Reserve Bank's (RBNZ) February forecasts, but analysts believe that the increase will not prevent additional reductions to the Official Cash Rate (OCR) in the coming months.

On the USD's front, consumer spending was stronger than expected in March, the US Census Bureau revealed on Wednesday. US Retail Sales rose by 1.4% in March, followed by the 0.2% increase seen in February. This figure came in better than the estimation of 1.3%. Markets reacted little to the release. 

Traders keep bets on Federal Reserve (Fed) rate cuts this year after Fed Chair Jerome Powell said that the central bank is well-positioned to wait for greater clarity before making any changes to the stance of policy. Financial markets expect the Fed to resume rate cuts in June and that by year-end the policy rate, currently in the 4.25%-4.50% range, will be a full percentage point lower.