NZD/USD Keeps Making Lower Highs, As RBNZ Gov Orr Remains Open to Easing

NZDUSD made a bullish reversal in the last two days, but the main trend remains bearish as the RBNZ starts to accept that policy easing is coming at some point. This forex pair reversed at the 0.6040-60 support zone but it stopped at the 20 daily SMA yesterday, so it continues to make lower highs.

RNBZ Governor Orr Commenting on Inflation and the Policy

Yesterday the Reserve Bank of New Zealand governor Orr made a statement, underscoring the importance of maintaining a flexible approach to inflation targeting, with a medium-term focus remaining appropriate. It emphasizes the significance of aligning levels of core inflation with the target range of 1 to 3% as part of efforts to bring inflation back to the midpoint of 2%.

The removal of the Monetary Policy Statement objective does not imply significant changes to the monetary policy strategy. However, it acknowledges that more work is needed to anchor inflation to the 2% target. Additionally, it notes the strength of the New Zealand Dollar (NZD) in the current week.

New Zealand Food Price Index

Indeed, the Food Price Index (FPI) in New Zealand can have an impact on the New Zealand dollar (NZD) due to its reflection of consumer spending patterns and its influence on inflation. In January, the FPI rose by 0.9% month-on-month, a notable increase compared to the previous month’s decrease of 0.1%. This uptick suggests potential inflationary pressures in the economy, which could influence monetary policy decisions by the Reserve Bank of New Zealand (RBNZ) and consequently affect the value of the NZD in currency markets.

New Zealand Elecronic Card Retail Sales for January

• Month-over-Month (MoM) electronic card retail sales for January remained unchanged at 1.7%, the same as in December.
• Year-over-Year (YoY) electronic card retail sales for January rebounded strongly to 1.6% from a decline of -0.6% in December.
• The Food Price Index (FPI) for January increased by 0.9% compared to a decrease of -0.1% in December.

NZD/USD Live Chart