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

Friday’s Asian session begins with the quarterly release of New Zealand CPI at 21:45 GMT. Considering the central bank's bearish bias, today’s Q4 2019 consumer price index (CPI) continues to be the key catalyst for the NZD/USD pair. Market consensus favors an increase to 1.8% from 1.5% in the YoY number versus a decline in QoQ figure to 0.4% from 0.7%.

Analysts at the Australia and New Zealand Bank (ANZ) anticipate further inaction from the Reserve Bank of New Zealand (RBNZ):

“We expect a headline print of 0.5% q/q (1.9% y/y), with a small tick up in tradable inflation. But for us, the key piece of information will be the non-tradable print. We expect a solid 0.7% q/q lift (stable at 3.2% y/y). An outturn in line with our expectation would be above the RBNZ’s forecast for a 0.6% q/q rise, with domestic pricing pressures continuing their gradual ascent and in a comfortable position for the inflation target. More broadly, the starting point inflation picture has improved and the outlook is looking more assured. A print within the range of market expectations is consistent with a patient RBNZ and out updated call for a flat OCR for some time from here.”

How could the data affect NZD/USD?

Considering the latest New Zealand GDP figures and the RBNZ’s not so bearish bias, not to forget improvement in second-tier data, any improvement in the headline inflation numbers will provide a positive impact on the Kiwi pair. Even so, the present risk-off sentiment, which supports the US dollar, might cap the NZD/USD pair’s gains unless the CPI rise dramatically that is less expected. All in all, today’s data is likely to keep the RBNZ its “wait and watch” mode unless providing any extreme figures.

On a technical side, prices need to break the range between 21 and 200-day SMA, near 0.6655 and 0.6510 respectively, in order to register major movement. While an upside break can quickly challenge the monthly high near 0.6760, November top surrounding 0.6470 can please the bears during the downside break below the 200-day SMA.

Key Notes

NZD/USD Price Analysis: Kiwi under bearish pressure near 2020 lows

NZD/USD remains stuck in tight range below 0.6600 ahead of NZ inflation data

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.