- NZ CPI meets upbeat market expectations.
- August rate cut still on the card.
- Trade/political headlines, the US Retail Sales and Fed Chair’s speech will be in focus.
With the headline inflation numbers matching upbeat forecasts, the NZD/USD pair takes the bids to 0.6720 during early Tuesday.
New Zealand’s second quarter (Q2) consumer prices index (CPI) data matched the market consensus. While the quarter-on-quarter figures posted 0.6% mark against 0.1% prior, the 1.7% YoY release is also up to the estimation versus 1.5% earlier.
Even if the price indices cross the previously downbeat readings, numbers are still in line with the Reserve Bank of New Zealand’s (RBNZ) recent forecast and continue to highlight possibilities of a rate cut in August.
The Kiwi pair recently benefited from the US Dollar (USD) weakness, like all other commodity-linked currency pairs. However, trade tensions between the US and China continue to remain present as a negative factor compressing the quote’s upside.
With the US Federal Reserve officials taking a step forward to meet markets’ bearish tone, the greenback becomes sellers’ favorite despite recently upbeat data from manufacturing and inflation.
On the other hand, the US and China have their own differences, maybe despite trade, that hinders the much-awaited deal between the world’s top two economies.
Having initially reacted to New Zealand’s inflation numbers, traders will now seek fresh clues from the US Retail Sales and the Fed Chair Jerome Powell’s speech, scheduled during the US session.
Buyers wait for sustained trading beyond 0.6730 to target the mid-April high of 0.6784. However, a downside break beneath 200-day exponential moving average (EMA) level of 0.6714 can drag prices back to early June tops surrounding 0.6680 and then in the direction to 0.6655 rest-point.