NZD Edges Higher As Rate Cut Expectations Are Pushed Out

The Kiwi traded higher on Wednesday, as traders push out their expectations for an RBNZ rate cut to November from October after CPI came in at 4% . The NZD was the top performing G10 currency on Wednesday up 0.58% to 0.5916, while the BBDXY erased Tuesday's gains closing down 0.35% at 1,261.78.

• The NZD/USD continued to move higher post CPI coming in at 4%, the currency made a high of 0.5925 late into the US session as US yields fell, before finishing the session at 0.5917. The pair still remains in a downtrend as it continues to trade well below the 20, 50, 100 & 200-day EMA, while the 14-day RSI indicator has ticked up from 31.75 to now hover around 37.
• Key levels to watch: Initial support is 0.5863 (Nov 11 lows) a break here could signal a move to test the yearly lows at 0.5774 (Oct 26 lows) while Initial resistant is at 0.5950 (Apr 15 highs).
• The US-NZ 2y is down 6bp to -23.75bps
• New Zealand's headline inflation slowed to 4% in the first quarter, but non-tradables inflation barely slowed to 5.8%, prompting caution from the Reserve Bank. Despite expectations for a rate cut, economists now predict the RBNZ will delay easing monetary policy until February 2025 due to persistent domestic inflation pressures.
• Option expiries: 0.5995 (NZD780m), 0.5900 (NZD745.3m), 0.6030 (NZD375.5m) Apr 18th NY cut
• Looking ahead: Next data released will be Trade Balance on Tuesday,