NZ CPI Rises As Expected | NZD/CHF On Cusp Of A Breakout

Whilst inflation is not exactly running hot, it does alleviate some pressure for RBNZ to ease again in August. And has kept NZD as the strongest major this past month.

Inflation data for New Zealand came in on target to see both annual and quarterly rise to 1.7% and 0.6% respectively. At 1.7%, it’s not too far from the centre band of their 1-3% inflation and CPI has clearly come a long way since its cycle low in 2016. And given RBNZ are watching inflation and employment data closely ahead of their 7th August meeting, it lowers the potential for further easing if employment is to improve.

At their last meeting, RBNZ weren’t quite as dovish as expected, although they added a lower cash rate ‘may’ be needed over time which still left the door open for it. Still, even if August is another hold, the NZD 5 and 6-month NZD overnight index swaps have full priced in a 25bps cut by the end of the year.

NZD has remained the strongest major over the past month which has seen the bearish trends on GBP/NZD and EUR/NZD develop nicely. As my colleague Fawad Razaqzada highlighted yesterday, GBP/NZD is near key support levels to the potential for a pullback could be on the horizon before the trend continues.

However, we’re now watching NZD/CHF for a break higher and technical suggest we may have seen a significant low. The lower indicator is measuring a % rally from a 3-month high and low. We can see that the cross has fallen around 5% over the prior 60 days, a decline that saw a sizable bounce for NZD/CHF in January. Obviously, we do have the benefit of hindsight here as prices have since recovered about 3.5%. But the rebound is constructive, formed a V-bottom and provided a higher high and low with a shallow pullback.

  • Today’s CPI data has seen it break to a new cycle high and now testing the March trendline
  • A break of the trendline opens-up a run for 0.6695 resistance
  • If we are to see a similar rebound in percentage terms like we saw in January, it could eventually head for the April high
  • The bias remains bullish above 0.6527, whereas a break below 0.6527 suggests the bearish trend from the 2019 is set to resume.

Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

Open an Account