When is NZ CPI and how might it affect NZD/USD?

At the start of Wednesday’s Asian session, we have the quarterly release of New Zealand CPI at 22:45 GMT. Considering the recent comments from RBNZ’s Orr and the central bank's bearish bias, today’s Q1 2019 consumer price index (CPI) could become a major catalyst for the NZD/USD pair.

Analysts at Westpac expect soft inflation print of 0.2% to roll out on a quarterly basis which in turn results in a dip in YoY figure to 1.6% from 1.9%. Westpac also expects OCR cut in May:

“The CPI release will be crucial ahead of the Reserve Bank’s next Monetary Policy Statement. A result in line with or below expectations would support our forecast of an OCR cut in May.”

TD Securities, on the other hand, is a bit optimistic about the headline inflation release as they say:

“We expect +0.5%/q or 1.9%/y, an upside surprise compared with the RBNZ’s Feb 1.6%/y. Tobacco, Education and Food lead the way, although most sectors add to the bottom line except communication (-0.3%/q) and a seasonal dip in public transport (-6.4%/q). We look for a stronger read relative to consensus. If realized, we look for NZD to outperform vs. the CAD where a dovish BOS and upcoming BOC meeting cast a long shadow over CPI data of its own.”

How could the data affect NZD/USD

With the easing trade tensions and renewed risk-on, not to forget comments from the RBNZ’s Orr signaling that possibilities to downbeat data have already been factored into the bank’s dovish bias, likely increases the market impact of an upbeat figure. The soft inflation pressure, meanwhile, may support the present market consensus of an OCR cut in May by the Reserve Bank of New Zealand (RBNZ) and may add weakness into the NZD/USD.

On a technical side, 0.6805/10 resistance-confluence comprising 50-day and 100-day simple moving average (SMA) could act as nearby upside cap holding the door for 0.6870 and 0.6910 numbers to the north. Alternatively, 200-day SMA level of 0.6730, 0.6710 and 0.6690 can act as immediate supports ahead of the key 0.6650 rest-point a break of which can drag the quote to 0.6585.

Key Notes:

NZD/USD Technical Analysis: Calm before the storm ahead of NZ CPI

NZD/USD retraces daily drop supported by risk-on flows, trades above 0.6760

About 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.