The New Zealand dollar continues to exhibit considerable volatility. NZD/USD has punched above the symbolic 70 level on Friday and is currently trading at 0.7011, up 0.48% on the day.
New Zealand CPI blows past forecast
It’s been a roller-coaster week for the New Zealand dollar. The currency jumped 1.2% on Wednesday after the RBNZ announced it was halting assets. However, the kiwi surrendered most of these gains on Thursday, as the US dollar flexed some muscle.
Friday’s CPI release was much stronger than expected, sending the New Zealand dollar back into 70-territory. CPI for Q2 rose 1.30% QoQ, smashing past the consensus of 0.80%. Annual inflation has now reached 3.3%, a 10-year high. With CPI running much stronger than the RBNZ or the market had anticipated, and ANZ described the CPI release as ‘monstrous’. This means that the RBNZ will have to act fast, and Westpac has already projected a 90% likelihood of a rate increase in August. One hike won’t be enough, as inflation has pushed above 3%, the upper range of the bank’s inflation target. The bank will likely have to raise rates into 2022, and this is a bullish development for the New Zealand dollar.
There was positive news from the manufacturing sector, as the BusinessNZ Manufacturing Index accelerated to 60.7 in June, up from 58.6 in May. Manufacturing continues to expand, but at the same time, the industry is being hampered by labour shortages and logistic difficulties.
Powell says no policy shift in the offing
Fed Chair Powell kept to his dovish script on Thursday, in his second day of testimony before Congress. Powell’s message to lawmakers was that despite the surge in inflation, the Fed considers it a temporary event and expects inflation to ease lower. Powell poured cold water on any expectations for a shift in monetary policy, stating that the economy would first have to show “substantial progress”.
NZD/USD technical
-
There is resistance at 0.7095. Above, we find resistance at 0.7191.
-
On the downside, there is support at 0.6913 which is protecting the round number of 0.6900. Below there is support at 0.6827.
This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities.
Opinions are the authors — not necessarily OANDA’s, its officers or directors. OANDA’s Terms of Use and Privacy Policy apply. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
Recommended Content
Editors’ Picks
AUD/USD tumbles toward 0.6350 as Middle East war fears mount
AUD/USD has come under intense selling pressure and slides toward 0.6350, as risk-aversion intensifies following the news that Israel retaliated with missile strikes on a site in Iran. Fears of the Israel-Iran strife translating into a wider regional conflict are weighing on the higher-yielding Aussie Dollar.
USD/JPY breaches 154.00 as sell-off intensifies on Israel-Iran escalation
USD/JPY is trading below 154.00 after falling hard on confirmation of reports of an Israeli missile strike on Iran, implying that an open conflict is underway and could only spread into a wider Middle East war. Safe-haven Japanese Yen jumped, helped by BoJ Governor Ueda's comments.
Gold price jumps above $2,400 as MidEast escalation sparks flight to safety
Gold price has caught a fresh bid wave, jumping beyond $2,400 after Israel's retaliatory strikes on Iran sparked a global flight to safety mode and rushed flows into the ultimate safe-haven Gold. Risk assets are taking a big hit, as risk-aversion creeps into Asian trading on Friday.
WTI surges to $85.00 amid Israel-Iran tensions
Western Texas Intermediate, the US crude oil benchmark, is trading around $85.00 on Friday. The black gold gains traction on the day amid the escalating tension between Israel and Iran after a US official confirmed that Israeli missiles had hit a site in Iran.
Dogwifhat price pumps 5% ahead of possible Coinbase effect
Dogwifhat price recorded an uptick on Thursday, going as far as to outperform its peers in the meme coins space. Second only to Bonk Inu, WIF token’s show of strength was not just influenced by Bitcoin price reclaiming above $63,000.