Key points:
The New Zealand dollar strengthened on Wednesday as domestically-driven inflation remained high, though headline figures eased to a three-year low. Despite this, markets continue to expect around three rate cuts by the end of the year.
See: Kiwi on the rise, trading at 0.60744 as seen on the VT Markets app.
New Zealand’s consumer price index (CPI) rose by 0.4% in the second quarter, slightly below the forecast of 0.5%. Annual inflation also slowed to 3.3%, down from 4.0% in the previous quarter, which was below the central bank’s expectation of 3.6%.
Also read: Australian and NZ dollars rise against the yen but fall against the dollar
However, non-tradable inflation, which focuses on domestic goods and services, remained high at 5.4%, just above the Reserve Bank of New Zealand’s (RBNZ) forecast of 5.3%, though it did ease from 5.8% in the previous quarter.
The New Zealand dollar (NZDUSD) gained 0.4% to $0.6074, recovering its overnight losses against a strong US dollar. The currency faces resistance at the 200-day moving average of $0.6077.
Overall, the inflation report presented no major surprises. Following the RBNZ’s dovish shift last week, markets are pricing in a total easing of 70 basis points by year-end, with the first rate cut potentially happening as early as next month.
The Australian dollar (AUDNZD) lost 0.5% to NZ$1.1075, moving away from a 20-month peak of NZ$1.1141 hit the previous day. It had been gaining on the kiwi due to a popular trade playing the policy divergence between Australia and New Zealand. Against the greenback, the Australian dollar (AUDUSD) remained flat at $0.6730, having fallen 0.4% overnight to as low as $0.6712. Support is around $0.6714, while resistance is at the six-month top of $0.6798.
Local bonds rallied alongside US Treasuries on expectations that the Federal Reserve is nearing a point where it will cut interest rates. The three-year Australian bond yield (AU3YT=RR) slipped 2 basis points to 3.968%, the lowest level in three weeks, while the 10-year yield eased 4 basis points to 4.212%, also the lowest since late June.
As markets digest these developments, the outlook for both the New Zealand and Australian dollars remains closely tied to upcoming monetary policy decisions and global economic trends.
Start trading now — click here to create your live VT Markets account.
Education
Company
FAQ
Promotion
Risk Warning: Trading CFDs carries a high level of risk and may not be suitable for all investors. Leverage in CFD trading can magnify gains and losses, potentially exceeding your original capital. It’s crucial to fully understand and acknowledge the associated risks before trading CFDs. Consider your financial situation, investment goals, and risk tolerance before making trading decisions. Past performance is not indicative of future results. Refer to our legal documents for a comprehensive understanding of CFD trading risks.
The information on this website is general and doesn’t account for your individual goals, financial situation, or needs. VT Markets cannot be held liable for the relevance, accuracy, timeliness, or completeness of any website information.
Our services and information on this website are not provided to residents of certain countries, including the United States, Singapore, Russia, and jurisdictions listed on the FATF and global sanctions lists. They are not intended for distribution or use in any location where such distribution or use would contravene local law or regulation.
VT Markets is a brand name with multiple entities authorised and registered in various jurisdictions.
· VT Global Pty Ltd is authorised and regulated by the Australian Securities & Investments Commission (ASIC) under licence number 516246.
· VT Global is not an issuer or market maker of derivatives and is only allowed to provide services to wholesale clients.
· VT Markets (Pty) Ltd is an authorised Financial Service Provider (FSP) registered and regulated by the Financial Sector Conduct Authority (FSCA) of South Africa under license number 50865.
· VT Markets Limited is an investment dealer authorised and regulated by the Mauritius Financial Services Commission (FSC) under license number GB23202269.
· VTMarkets Ltd, registered in the Republic of Cyprus with registration number HE436466 and registered address at Archbishop Makarios III, 160, Floor 1, 3026, Limassol, Cyprus.
Copyright © 2024 VT Markets.