NZD/USD slumps to 0.6330 area ahead of key economic events

• RBNZ’s inflation expectations declined further in the fourth quarter.
• US Dollar Index stays in a consolidation phase above 98.
• Coming up: US Pres. Trump’s speech and RBNZ policy announcements.

The NZD/USD pair registered modest gains on Monday but came under bearish pressure during the Asian trading hours after the Reserve Bank of New Zealand’s (RBNZ) Survey of Expectations showed a further decline in inflation expectations. As of writing, the pair was trading at 0.6330, losing 0.45% on a daily basis.

Eyes on RBNZ rate decision

The RBNZ’s Inflation Expectations for the fourth quarter fell to 1.8% from 1.86% in the previous publication. Commenting on the potential impact of that data on the RBNZ’s policy rate, which will be announced on Wednesday,  “This alters the balance of available information ahead of tomorrow’s OCR decision.  Accordingly, we are reverting to forecasting an OCR cut tomorrow  (previously on hold),” said Westpac analysts.

On the other hand, the US Dollar Index is moving sideways near the 98.30 mark ahead of today’s key events. US President Donald Trump will  be speaking at a luncheon hosted by the Economic Club of New York on Tuesday and investors will be looking for comments on the trade dispute with China.

Later in the session, Federal Open Market Committee (FOMC) members Barking and Harker will be delivering speeches as well. Meanwhile,  Fed Vice Chairman Richard Clarida did not comment on his current views about the economy or the near-term policy outlook in his prepared remarks for a conference in Switzerland on Tuesday.

Technical levels to watch for