New Zealand CPI beats expectations and NZD/USD comes under pressure from daily resistance

The New Zealand Consumer Price Index, released by Statistics New Zealand, missed expectations and weighs on NZD/USD as follows:

  • CPI (QoQ) Q1 1.8% (est 2.0%; prev 1.4%).
  • CPI (Annual) Q1 6.9% (est 7.1%; prev 5.9%).

NZD/USD falls from 0.6806 to a low of 0.6783 so far:

Price exited daily resistance as per the reaction of the 5-minute chart above and is now poised to take hourly support near 0.6770:

As for the daily chart:

The bears are engaged and should support the break; then the outlook is bearish after that:

Sector-factor model of core inflation

Now traders will be watching for more inflation data at 00300 GMT. The RBNZ’s preferred sector factor model for measuring underlying inflation. This measure of inflation separates the components of the CPI into tradables (products that are imported or compete with imports) and nontradables (products that are not exposed to international factors). By distinguishing these two sectors, whose prices are widely considered to be influenced by different things, the model allows an interpretation of what is driving underlying inflation. Central banks often use the concept of underlying inflation to examine actual or underlying price inflation, abstracting from short-term volatility.

About the Consumer Price Index

The Consumer Price Index published by Statistics New Zealand is a measure of price movements by comparing the retail prices of a representative basket of goods and services. The purchasing power of the NZD is dragged down by inflation. The CPI is a key indicator for measuring inflation and changing buying trends. A high reading is seen as positive (or bullish) for the NZD, while a low reading is seen as negative.

About Rodney Fletcher

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