Breaking: New Zealand Q4 CPI: YoY 1.9% / QoQ 0.5% (NZD bullish)

FXStreet Team FXStreet

New Zealand fourth-quarter (Q4) Consumer Price Index has been released.

Consumer Price Q4 Index

NZ Q4 Consumer Price Index Non-Tradables +3.1 pct vs yr ago.
NZ Q4 Consumer Price Index +1.9 pct vs year ago (Reuters poll +1.8 pct), vs 1.5% prior.
New Zealand Q4 Consumer Price Index +0.5 pct vs pvs Q( Reuters poll +0.4 pct), vs 0.7% prior.
NZ Q4 consumer price index non-tradables +0.6 pct vs pvs Q.

Ahead of the data, analysts at ANZ bank explained that the key piece of information will be the non-tradable print.

Price analysis, before and after

Before: Price Analysis NZD/USD: CPI coming up, bulls look to 50% mean reversion, bears, 61.8% Fibo

After: NZD/USD has rallied on the better than expected data. The move has been surprisingly subdued, so far, with the QoQ below the prior reading, but the data reveals a likely positive for the bird going forward overall as markets will reduce pricing of an imminent rate cut from the Reserve Bank of New Zealand. The inflation data was higher than the Reserve Bank of New Zealand's (RBNZ) forecast a 0.2% rise in quarterly CPI. See below for the full story on NZD/USD and a 50% man reversion could be on the cards

Description

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.

NZD/USD implications

NZD: neutral RBNZ not a catalyst for more strength

Analysts at ANZ Bank explained that they have shifted our call on the overnight cash rate (OCR), removing the forecast cut for May, citing: better forward activity indicators, the promise of more fiscal spending and inflation sitting close to target.

"To reflect this more patient RBNZ setting, we are revising up our NZD forecasts, although we retain our downside bias through the end of 2020.
We think recent strength in the NZD reflects a correction in confidence, rather than a signal of sustained improvement in New Zealand’s economy.
Volatility around the US election and renewed concerns over global growth are likely to be catalysts for weakness later in the year."

Author

FXStreet Team

FXStreet

Composed of a group of economic journalists and FX experts, the FXStreet content team produces and oversees all content published on FXStreet. It provides a purely journalistic approach to the Forex market.

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