New Zealand Dollar Talking Points
NZD/USD[1] gives back the rebound from the monthly-low (0.6688) as the threat of a trade war dampens the outlook for the Asia/Pacific region, but fresh developments coming out of the New Zealand economy may shore up the kiwi-dollar exchange rate as the headline reading for inflation is expected to pick up in the second-quarter of 2018.
NZD/USD Rate Eyes July-Low Ahead of New Zealand Inflation Report
Updates to New Zealand’s Consumer Price Index (CPI) is anticipated to show the gauge increasing 1.6% per annum versus the 1.1% print for the first three-months of 2018, and signs of stronger price growth may heighten the appeal of the New Zealand dollar[2] as it puts pressure on the Reserve Bank of New Zealand (RBNZ) to lift the official cash rate (OCR) off of the record-low.
However, a batch of lackluster data prints may encourage the RBNZ to buy more time as ‘consumer price inflation remains below the 2 percent mid-point of our target,’ and Governor Adrian Orr & Co. may stick to the current script at the next meeting on August 9 as officials note that ‘the best contribution we can make to maximising sustainable employment, and maintaining low and stable inflation, is to ensure the OCR is at an expansionary level for a considerable period.’
With that said, the deviating paths for monetary policy instills a outlook for NZD/USD especially as the Federal Open Market Committee (FOMC)[3] appears to be on course to deliver four rate-hikes in 2018, and the exchange rate may continue to track the bearish trend from earlier this year as the Relative Strength Index (RSI) highlights a similar dynamic. Sign
