Familiar Resistance Level Caps Rally

The latest reading of U.S. CPI inflation was the main market mover on Wednesday, outweighing any local developments. NZD/USD shot higher as U.S. consumer price growth fell broadly in line with forecasts, inspiring a decent round of greenback sales. Resistance from Dec 30 & Jan 3 highs, both located at $0.6857, capped gains as NZD/USD swung higher, which reinforces the technical importance of that level. The rate trades flat at $0.6850 as we type, in close proximity to Wednesday's peak.

• In the wake of yesterday's price action, the key initial layer of resistance has been defined at $0.6857, with the 50-DMA intersecting not too far away at $0.6862. A break above there would expose Dec 1 high of $0.6868, followed by the $0.6900 mark. On the downside, bears need a slide through Jan 6 low of $0.6733 to regain poise.
• New Zealand's building approvals rose 0.6% M/M in November after a 2.1% decline recorded in the previous month.
• On a side note, RBNZ Dep Gov Bascand left his role on Dec 17, earlier than planned, after breaching protocol by making unauthorised comments about the restructuring of the Reserve Bank's leadership.