Forex Marketz Daily Forex News – Fully Markets Update
This morning, New Zealand released its producer price index (PPI). After the release the Kiwi dollar held on to its gains after the release of the US Federal Open Markets Committee (FOMC) despite a mixed bag of PPI data.
Wholesale input costs, in New Zealand, rose 1.4 percent in the second quarter (Q2). This is compared a 0.8 percent increase in the first financial quarter of 2017. This PPI print was the strongest increase in prices since the third quarter (Q3) of 2016.
Looking deeper into the wholesale inflation report, note that output cost numbers showed the baseline wholesale inflation rate did slow somewhat. This number ended up posting a gain of 1.3 percent versus a 1.4 percent increase in the first three months or first quarter of 2017. What is concerning, this marks the third consecutive decline in this data series. It is also closely mirroring the closely-watched Consumer Price Index or CPI report.
After the inflation numbers crossed the news wires, the NZD/USD Forex market, as mentioned above, surprisingly held onto its earlier gains seen after the FOMC minutes release during the North American trade hours.
PPI Data has Little Impact on the Kiwi Dollar
As mentioned above the CPI series is more closely watched by Forex traders. Also the last Reserve Bank of New Zealand (RBNZ) monetary policy announcement, last week, was very specific for the central bank’s policymakers’ need for a weaker New Zealand Dollar. The recent appreciation, with the NZD, is expected to have a negative impact on inflation.
RBNZ officials noted that they have seen easing with the headline inflation (CPI). The central bank expect the prices for tradeable commodities and assets to remain weak.
