Kiwi’s near-term momentum is positive, and economists at Westpac are targeting the 0.6700 level. The market is set to ignore local data as the NZD/USD reaction to CPI figures was muted. Consumer prices rose 0.7% in the September quarter, taking annual inflation down slightly to 1.4%. The result was lower than expected and will reinforce the Reserve Bank’s view that ongoing monetary stimulus is needed. Global developments are to move the pair.
Key quotes
“NZD/USD remains supported near-term by global sentiment, such that a test of 0.6700 during the next few days is possible.”
“Global influences should dominate domestic surprises such as today’s weaker-than-expected CPI inflation data. While the data surprise supports the RBNZ’s view that much more work needs to be done to drive inflation towards target, markets have already priced a large OCR cut next year so the NZD/USD impact of today’s news is likely to be minor. More likely it will be seen in a higher AUD/NZD cross on the day, towards 1.0700.”
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