NZD/USD round tripped from an intraday high of $0.6380 on Wednesday, as U.S. inflation data took centre stage. Greenback weakness into the release allowed NZD/USD to creep higher, but the rate pulled back as headline and core CPIs printed above expected levels. A firm rebound to intraday highs followed as participants judged that the bar to larger-than-50bp hikes in the U.S. remains high, but NZD/USD failed to hold onto those gains and eased off. It still finished slightly above neutral levels, snapping a four-day losing streak.
- NZD/USD trades at $0.6291, down 9 pips on the day. Losses past May 10 low of $0.6276 would turn focus to the 61.8% retracement of the 2020 - 2021 rally at $0.6232. Bulls look for gains towards May 5 high of $0.6568.
- FinMin Robertson warned that "the short-term challenge of inflation is significant" and pledged to make sure fiscal spending is "careful" and "targeted." But he refused to commit to any major spending cuts, as New Zealand cannot put off addressing long-term challenges. "If we decided against reforming our health system, we would not see lower petrol prices." Robertson didn't see the country heading for recession, even as some experts suggested that such a risk is increasing.
- The latest REINZ report showed that "a further slowdown in sales activity, more moderate price growth and, as properties stay on the market for longer, it appears favourable to buyers backed by equity. REINZ commented that "We’re now in the phase of the property cycle where demand has weakened, sale counts are down but prices remain high."
- The RBNZ will publish Q2 Survey of Expectations today. Reminder that this is a survey of forecasters, economists, and industry leaders. The data on household inflation expectations will be released on May 19.