When is the New Zealand CPI, and how could it affect the NZD/USD?
|NZ CPI overview
The latest New Zealand CPI reading, slated for late Monday at 22:45 GMT, sees market forecasts anticipating an improvement in the long-term figures, but some slack in the most recent quarters, with the y/y Consumer Price Index expected to print at 1.6% (previous 1.1%), and the q/q reading for 2018's second quarter to clock in at 0.5%, remaining in-line with the previous quarter's figure.
Price growth continues to flub below the Reserve Bank of New Zealand's (RBNZ) desired targets, and with inflation continuing to struggle to post modest increases over time, the RBNZ is widely expected to remain frozen on rates until well into 2019, and any CPI readings coming in below expectations could hamper bulls' efforts significantly, as further-deflating inflation readings would only push the RBNZ further out on the time horizon.
Today's Q2 CPI reading could carry a bit more weight than normal, as noted by analysts at ANZ: "however, today’s release for Q2 has more interest than normal. That is in part because of the point we are in the economic cycle (where growth momentum looks to be slowing, and the implications that has for the inflation outlook), partly because the RBNZ shifted a little more dovish last month, and partly because there is a wide variety of views on what the figures will show (the Bloomberg consensus has a large range of 0.1% to 0.7% for quarterly headline inflation)."
How could it affect the NZD/USD?
There is a chance that bearish pressure has alleviated from the Kiwi for the time being, as noted by FXStreet's own Eren Sengezer: "the RSI indicator on the daily chart rose toward the 50 mark, suggesting that the bearish momentum is losing strength. On the upside, the initial resistance for the pair aligns at 0.6795/0.6800 (daily high/20-DMA/psychological level), 0.6855 (Jul. 9 high) and 0.6895/0.6900 (50-DMA/psychological level). Supports could be seen at 0.6750 (Jul. 15 low), 0.6685 (Jul. 2 low) and 0.6600 (psychological level)."
However, a bearish reading for the NZ CPI would be unwelcome by Kiwi bulls, and the NZD/USD's core price action will be driven by whether or not inflation is continuing to inch towards the RBNZ's targets.
Key notes
NZD/USD bulls sitting pretty above bearish channel's resistance ahead of CPI
About the NZ CPI
Consumer Price Index released by the Statistics New Zealand is a measure of price movements by the comparison between the retail prices of a representative shopping basket of goods and services . The purchase power of NZD is dragged down by inflation. The CPI is a key indicator to measure inflation and changes in purchasing trends. A high reading is seen as positive (or bullish) for the NZD, while a low reading is seen as negative.
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