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New Zealand started 2014 with lower than expected prices: 0.3% instead of 0.5% expected in the quarter and only 1.5% instead of 1.7% year on year, lower than 1.6% in the previous quarter. New Zealand’s No. 1 export, dairy products, suffered a stronger than expected drop.

NZD/USD fell from around 0.8640 to 0.8580. Has it found stable ground or does it have more to fall?

As New Zealand publishes CPI data only once per quarter this publication always has a significant impact on the kiwi. In this case, it may also slow down the tightening cycle the RBNZ commenced upon.

The RBNZ meets next week for the first time after the well telegraphed rate hike, which also included hawkish comments about many upcoming moves. The central bank will probably raise the rates once again from 2.75% to 3%, but could hint about a pause or a slowdown in the next moves.

NZD/USD is now at support around 0.8586. If it falls makes a convincing break lower, the next line is 0.85, which is a round number. Resistance awaits at 0.8650.

For more, see the NZDUSD forecast.