- NZ Inflation Beat RBNZ & Economists Expectations, Will Bank Hike 75bps?
- Sentiment changed mixed following Apple’s report that hiring will slow, reigniting concerns about the US recession among investors.
- ANZ Bank expects the RBNZ overnight rate (OCR) to end at 4% instead of 3.5%.
The NZD/USD It barely posted any gains on Monday, thanks to a late surge in risk aversion spurred by news that US tech giant Apple plans to slow hiring, fueling US recession fears among market participants, who sought safety. , which in the currency space, some of the majors, saw their early gains cut back against the dollar.
NZD/USD is trading at 0.6151, up almost 0.06%, after reaching a daily high around 0.6200, but sellers stepped in and outperformed buyers, sending the pair down towards current price levels.
NZD/USD remains positive on high New Zealand inflation and expectations for further hikes
The market mood has soured, as US stocks show. The USD is making up some ground as the US Dollar Index shows, bouncing from daily lows around 106.892 and rising towards 107.354, although remaining down almost 0.60% on the day.
The lack of economic data in the US leaves traders pending last week’s US inflation reports, retail sales and the UM Consumer Sentiment Index (CSI). US inflation, led by the consumer and producer price indices, rose to new multi-decade highs, fueled by high energy and food prices. However, the core CPI figure fell below the 6% threshold, falling for the third month in a row, which would dissuade Fed officials from triggering a 100 basis point rate hike. Furthermore, UoM Consumer Sentiment inflation expectations reinforce the case, as it fell from 3.1% to 2.8% in 5 years.
In New Zealand, the second quarter consumer price index rose 7.3% year-on-year, above the 6.9% estimate by economists and topping the 7% estimate by the Reserve Bank of New Zealand (RBNZ). NZD/USD reacted positively to the report, jumping from 0.6149 to 0.6170 as further tightening would be needed, analysts at ANZ Bank said.
“We have changed our OCR forecast and now expect the series of 50 basis point hikes to continue through November, meaning an OCR endpoint of 4.0% instead of 3.5%. A 75 basis point hike in the MPS of August is a very real possibility, especially if labor market data on August 3 delivers another hawkish surprise,” the ANZ analysts wrote.
What to watch out for
New Zealand’s economic docket will include the World Dairy Trade Price Index on Tuesday. In the United States, building permits and housing starts for June will be published, along with the Redbook.
Key NZD/USD Technical Levels
Source: Fx Street
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