FX Range Trading, Kiwi Underperforms Following Lower Inflation Data

The US dollar is stronger in APAC trading today with the BBDXY index up 0.1%. Kiwi is the underperformer followed by Aussie after NZ inflation expectations eased further. Other G10 currencies are minimally lower against the greenback.

• FX markets are range trading ahead of the US CPI data later but regional equities are generally higher.
• NZDUSD is down 0.5% to 0.6098, close to the intraday low. It was trading around 0.6126 ahead of the RBNZ’s Q1 inflation expectations. The 2-year ahead measure is now at the mid-point of the target band at 2.5% down from 2.8% in Q4 and the 1-year ahead close to the top of the band at 3.2% down from 3.6%. The data make any further RBNZ tightening unlikely.
• AUDUSD is down 0.3% to 0.6514 and has followed today’s USD trends with some further downward impetus from the softer kiwi data. AUDNZD has bounced 0.3% to 1.0683.
• USDJPY is little changed rising 0.1% to 149.56 but yen has gained against the Aussie falling to 97.42 and EURJPY is slightly higher at 160.96.
• European currencies are all down around 0.1% against the greenback.
• EM Asia is also little changed against the USD with the USDTHB move of +0.3% the most noteworthy.
• Later the focus is on the US CPI (see MNI US CPI Preview) which is forecast to moderate to 0.5pp to 2.9%. There is also US real earnings for January and UK employment/wages are released. The ECB’s Buch and Tuominen make appearances.