The New Zealand CPI (Consumer Price Index), which is released every quarter, measures the change in the price of goods and services charged to consumers. CPI readings which are higher than forecast are bullish for the New Zealand dollar.
Here are all the details, and 5 possible outcomes for NZD/USD.
Published on Tuesday at 22:45 GMT.
Indicator Background
CPI is the leading inflation indicator, and is thus one of the most closely monitored indicators. As a market-mover, a reading which is not in line with the forecast can affect the direction of NZD/USD.
CPI for Q4 of 2012 declined 0.2%, missing the estimate of 0.1%. It was the first decline since Q4 of 2011. The markets are expecting a turnaround, with an estimate of a 0.5% gain in the upcoming reading.
Sentiments and levels
Recent New Zealand releases have looked good for the most part, including Business Confidence and the Manufacturing Index. As well, GDP rose a healthy 1.5% in Q4. Thus, the overall sentiment is bullish on NZD/USD towards this release.
Technical levels, from top to bottom: 0.8842, 0.8573, 0.8476, 0.8356, 0.8173 and 0.8101.
5 Scenarios
- Within expectations: 0.2% to 0.8%. In this scenario, NZD/USD could show some slight fluctuation, but it is likely to remain within range, without breaking any levels.
- Above expectations: 0.9% to 1.2%: A reading above expectations could push the pair above one resistance level.
- Well above expectations: Above 1.2%: An unexpectedly sharp rise in inflation could push NZD/USD above two or more lines of resistance.
- Below expectations: -0.1% to 0.1%: A lower than expected reading could pull the pair downwards, with one support level at risk.
- Well below expectations: Below -0.1%: Such a reading would likely hurt the kiwi, and the pair could break two support levels or more.
For more on NZD/USD, see the New Zealand dollar forecast.
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