USD to NZD Rate Consolidating After the New Zealand Inflation Report

The rate of USD to NZD has been consolidating since Monday with markets awaiting to see how the situation will evolve from here. Last night we had the Q1 CPI inflation report from New Zealand, but the numbers were sort of a mixed bag, which sent the price down in NZD/ISD initially then back up.

NZD/USD Chaart H1 – MAs Are Keeping the Trend Bearish

The Reserve Bank of New Zealand’s decision to maintain its official cash rate aligns with its commitment to keep monetary policy restrictive for an extended period. However, last night New Zealand CPI data showing a deceleration in inflation compared to expectations may challenge this patience stance.

 NZD/USD experienced a significant decline following another robust US CPI report, as evidenced by the H1 chart above, ultimately reaching a critical support zone near the 0.5870 level, however we saw another dip last night after the CPI report, which took the price to 0.5860. In anticipation of a potential rally towards the trendline, buyers may enter the market, placing their stop-loss orders below this zone to manage their risk. On the other hand, sellers aiming to strengthen their bearish positions at 0.5900-20 would require a further decline in price, potentially necessitating a lower price break.

New Zealand’s Inflation Data for the January-March Quarter of 2024

• Q1 Consumer Price Index (CPI) increased by 0.6% quarter-on-quarter (q/q), meeting expectations and up from the previous quarter’s increase of 0.5%.
• Year-on-year (y/y) CPI stood at 4.0%, marking the lowest level since 2021 but still significantly above the Reserve Bank of New Zealand’s (RBNZ) target. This figure was in line with expectations but down from the previous reading of 4.7%.
• The non-tradeable component of CPI rose by 1.6% q/q and 5.8% y/y.

New Zealand’s inflation data for the January-March quarter of 2024 reveals that the Consumer Price Index (CPI) rose by 0.6% quarter-on-quarter (q/q), matching expectations and slightly higher than the Q4 of 2024 CPI of 0.5%. On a year-on-year (y/y) basis, inflation stood at 4.0%, marking the lowest level since 2021 but still significantly above the Reserve Bank of New Zealand’s (RBNZ) target. This figure was in line with expectations but lower than the previous reading of 4.7%, which shows that the declining trend continues.