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Inflation Overshoot Bolsters NZD

NZD

The kiwi knee-jerked higher as New Zealand's CPI rose 3.3% Y/Y in Q2, beating consensus estimate of +2.7% and breaking above the RBNZ's target range of +1.0%-3.0%. Quarterly inflation registered at +1.3%, easily topping the RBNS's forecast from May MPS (+0.6%). Stats NZ identified housing and household utilities as the main contributors to the quarterly increase in consumer prices.

  • NZD/USD shot to a fresh session high of $0.7029, retraced the move and bounced again. It last sits +25 pips at $0.7009. The rate still sits within the confines of yesterday's range, which leaves familiar technical levels in play.
  • The kiwi earlier showed virtually no reaction to BusinessNZ M'fing PMI, which improved to 60.7 in June from 58.6 in May. BNZ commented that "all up, the recent themes of strong demand and considerable supply-side challenges remain intact."
  • Focus turns to the RBNZ's sectoral factor model of core inflation, due later in the day.

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