New Zealand CPI rose 0.4% qoq, 1.5% yoy in Q2, accelerated from Q1’s 0.5% qoq and 1.1% yoy. The headline number missed expectations of 0.5% qoq, 1.6% yoy. However New Zealand Dollar later reacts to RBNZ’s own prices data. Most notably, the sectoral factor model CPI rose to 1.7% yoy in Q2. There were continuous imrpvements since last year from 1.4% in Q3 2017 to 1.5% in Q4 2017 to 1.6% in Q1 2018.
The sectoral factor model CPI was created by RBNA to estimate the common component of inflation in the CPI basket, the tradable basket, and the non-tradable basket, based upon separate factors for the tradable and non-tradable sectors. The data excludes GST. It’s one of RBNZ’s preferred core inflation gauge.
AUD/NZD dives sharply after the release after it was one again rejected by 61.8% retracement of 1.1289 to 1.0486 at 1.0982. Deeper fall should now be seen back to 1.0844 support first. Further break of 55 day EMA (now at 1.0823) will target 1.0656 key support level.
