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


Tuesday’s Asian session begins with the quarterly release of New Zealand CPI at 21:45 GMT. Considering the recent comments from the RBNZ’s Governor Orr and the central bank's bearish bias, today’s Q2 2019 consumer price index (CPI) continues to be the key catalyst for the NZD/USD pair. Markets consensus favors an increase to 1.7% from 1.5% in the YoY number versus a rise to 0.6% from 0.1% in the quarterly inflation figure.

Analysts at Westpac join the broad expectations of a 0.6% rise in the inflation gauge to roll out on a quarterly basis which in turn results in an increase in YoY figure to 1.7% from 1.5%. Westpac also expects OCR cut in August:

“Higher fuel prices account for about half of the expected increase for the quarter. We expect measures of underlying inflation to hold steady. A new method for measuring rents will lead to a small lift in the overall inflation rate from here on. Our forecast is in line with the Reserve Bank’s view, and would not stand in the way of a further OCR cut in August.”

TD Securities also joins the flow as they say:

“We forecast Q2 inflation to rise by 0.5% in the June qtr lifting annual inflation to 1.6%. This is a touch below the RBNZ's 0.6% q/q forecast. While higher oil prices in the qtr account for more than 60% of the increase in consumer prices, food prices, at 20% of the basket, impart a mild downside bias. A print in line with RBNZ forecasts keeps an Aug rate cut in play.”

How could the data affect NZD/USD?

Not only recently easing tensions at the US-China trade front and renewed risk-on but the dovish verdict from the RBNZ signaling possibilities that downbeat data have already been factored also increases the market impact of an upbeat figure. The soft inflation pressure, meanwhile, may support the present market consensus of an OCR cut in August by the Reserve Bank of New Zealand (RBNZ) and can trigger the NZD/USD pullback.

On a technical side, sustained trading beyond 0.6730 becomes necessary for the pair to extend its latest run-up towards the mid-April high of 0.6784. However, a downside break beneath 200-day exponential moving average (EMA) level of 0.6714 can drag prices back to early June tops surrounding 0.6680 and then in the direction to 0.6655 rest-point.

Key Notes:

NZD/USD technical analysis: Bulls trying to seize control above 200-DMA/50% Fibo. confluence region

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.

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