Forex Marketz Daily Forex News – Fully Markets Update
New Zealand released its consumer price index data this morning. The result tamed the current Kiwi rally a bit, as the benchmark NZD/USD Forex market moved lower during Asian trading hours.
The softer inflation numbers for the fourth quarter of 2017 were the chief culprit sending the Kiwi dollar lower against its major Forex trading partners. In the fourth quarter the consumer price index rose, annually, by 1.6 percent 0.1 percent quarterly. The third quarter CPI readings were a 1.9 percent and 0.5 percent, respectively. Analysts and market watchers were expecting no change with the consumer price index.
This surprise outcome has reduced near term Reserve Bank of New Zealand interest rate hike expectations. Right now, the Forex and other financial markets are pricing in a 60 percent chance that the Kiwi central bank will raise its official cash rate one time this year. After the print crossed the wires, local New Zealand government bond yields fell alongside the New Zealand dollar.
Kiwi Dollar Traders Look Towards the RBNZ
If you are paying attention to the Reserve Bank of New Zealand’s inflation projections, as Forex traders should, from the RBNZ’s latest monetary policy announcement, the central bank forecasted inflation hitting their target of two percent sooner than expected. Today’s soft patch of CPI data seems to have inflation heading in the wrong direction.
A batch of soft economic data could spark a bearish reaction in the New Zealand dollar. The soft data will encourage the central bank to stick to its wait and see monetary policy for a longer period of time. Incoming RBNZ Governor Adrian Orr may keep the bank on the sidelines during the first half of 2018 thanks to subdued inflation.
