NZD/USD back below the 0.72 handle post CPI knee-jerk spike

Ross J Burland FXStreet

Currently, NZD/USD is trading at 0.7190, up 0.26% on the day, having posted a daily high at 0.7212 and low at 0.7167.

New Zealand Consumer Price Index (YoY) came in at 1.9%, above expectations (1.8%) in 3Q

NZD/USD has settled back below the 0.72 handle after the initial CPI spike to the aforementioned highs. The CPI data was for Q3 and arrived at 0.5% q/q vs the expected 0.4%. This came in substantially higher than the RBNZ forecasts. However, markets are also watching out for the NZ government formation announcement to watch out for.

New Zealand Consumer Price Index (QoQ) came in at 0.5%, above forecasts (0.4%) in 3Q

NZD/USD 1-3 month:

"If the RBNZ remains firmly on hold, as we expect, and the US dollar rises on a delivery of a Fed interest rate rise in December, then NZD/USD could fall to 0.70 by year end," argued analysts at Westpac.

NZD/USD levels

The bird really needs to get through 0.7240 to confirm that a significant correction of the 20th Sep highs is in place - a subsequent break of there could open doors towards 0.7315.

0.7370 (the 9th Aug high) is the next key hurdle on the upside and a break there would solidify a bullish trend back towards 0.7522 and the YTD highs so long as there are closes on the 0.74 handle and beyond the post FOMC kneejerk highs of 0.7434. To the downside, 0.7052, a 19-week low, guards the psychological 0.7000 level to target 0.6908, 11th April low.

Author

Ross J Burland

FXStreet

Ross J Burland, born in England, UK, is a sportsman at heart. He played Rugby and Judo for his county, Kent and the South East of England Rugby team.

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