NZD/USD Testing the 200 SMA After Inflation Jumps in Q3
The New Zealand dollar turned bearish in July as risk assets such as commodity currencies weakened versus the US dollar and havde been falling for more than two months. Although the NZD has been holding better and has been trading in a range since early September, with a support zone below 0.59. The weakness in China’s economy was weighing on risk assets, but we have seen some improvements lately.
In contrast, the US economy has demonstrated resilience, with employment data issued last week showing that the job market is in good shape. Besides that, the CPI (consumer price index) report for September came above expectations last week, which helped send this pair nearly 2 cents lower near the support. Last night we had the Q3 CPI inflation report from New Zealand, with the headline CPI YoY predicted to tick lower to 5.9% from 6.0% before, while the Q0Q number was expected to jump up to 2.0% in Q3 from 1.1% in Q2.
The high inflation rate is mostly attributable to the substantial increase in gasoline prices. Unless there was a significant upside surprise in the YoY number, the RBNZ is unlikely to respond with another rate hike because it has signaled that it is willing to see past the short-term “noise.”
New Zealand Consumer Price Index Inflation Report
NZD/USD Live Chart
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