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

Amid the early Asian session on Monday, the Statistics New Zealand is up for releasing New Zealand’s (NZ) first quarter (Q1) Consumer Price Index (CPI) at 22:45 GMT. While most of the RBNZ’s latest actions, to combat the coronavirus (COVID-19), have already dimmed prospects for an immediate response to the key inflation data, the CPI will be important for near-term monetary policy decision and hence gains importance among the NZD/USD pair traders.

Forecasts suggest the headlines CPI YoY to arrive at 1.8%, softer than 1.9% prior, whereas QoQ figures may drop to 0.3% from 0.5% previous readouts.

Westpac joins the chorus while saying:

We expect a 0.4% rise in consumer prices for the March quarter, lifting the annual inflation rate to 2.1%. Our estimate is in line with market forecasts, and a touch below the 0.5% increase that the Reserve Bank expected in its February Monetary Policy Statement. We don’t expect this release to be market moving, with markets more focused on how the lockdown progresses.

How could the data affect NZD/USD?

Traders have recently been cheering the RBNZ actions and consider the New Zealand central bank as having deeper pockets to fight against the deadly virus. However, the latest appearance by the RBNZ Governor Adrian Orr cheered the central bank’s performances and dims the hope of any further moves unless the CPI marks extremely downbeat figures. As a result, today’s CPI might have a little impact on the Kiwi pair’s performance if being mildly negative, near to the forecast, while upbeat figures could be welcomed by adding more gains to the current recovery.

On a technical side, the pair’s recent bounce off 21-day SMA enables it to again aim for 50-day SMA, currently near 0.6125, ahead of aiming to challenge the monthly top of 0.6131 for one more time. Alternatively, sellers will look for entry below 0.5965 comprising 21-day SMA.

Key Notes

NZD/USD firmed-up through 0.60 level dollar weakness, NZ CPI next in view

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.