HomeContributorsFundamental AnalysisNew Zealand Dollar Shrugs as Inflation Expectations Remains Near 2%

New Zealand Dollar Shrugs as Inflation Expectations Remains Near 2%

The New Zealand dollar is showing limited movement on Monday. In the European session, NZD/USD is trading at 0.5967, up 0.07% on the day. The New Zealand dollar was trounced on Friday, falling 1%.

New Zealand inflation expectations inch up to 2.1%

New Zealand inflation expectations inched higher to 2.1% in the fourth quarter, up from 2.0% in Q3. Expectations for one-year ahead annual inflation declined to 2.05% from 2.40%. The Reserve Bank of New Zealand keeps a careful eye on inflation expectations are they can translate into real inflation. Inflation has been on a downtrend and fell to 2.2% in the third quarter, the first time in over three years that inflation is back in the target band of 1% to 3%.

The RBNZ has been aggressive in its easing cycle in response to falling inflation. The central bank slashed the cash rate by 50 basis points to 4.75% last week and is expected to reduce rates by another 50 bp at the final meeting of the year on Nov. 27. The RBNZ is likely to continue trimming rates in 2025, with the pace and size of rate cuts largely dependent on inflation, employment and GDP.

China’s CPI ticks lower

China’s consumer prices rose 0.3% y/y in October, below the 0.4% gain in September and the lowest since June. This missed the market estimate of 0.4%. The monthly reading pointed to deflation, coming in at -0.3%, compared to 0% in September and lower than the -0.1% market estimate. China’s central bank announced in September aggressive stimulus to boost the sluggish economy and encourage more consumption, but the measures will take time to filter through the economy.

NZD/USD Technical

  • NZD/USD has pushed above resistance at 0.5987 and is testing resistance at 0.6002
  • There is support at 0.5957 and 0.5942
MarketPulse
MarketPulsehttps://www.marketpulse.com/
MarketPulse is a forex, commodities, and global indices research, analysis, and news site providing timely and accurate information on major economic trends, technical analysis, and worldwide events that impact different asset classes and investors. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities.

Featured Analysis

Learn Forex Trading