New Zealand Dollar (NZD) Faces Decline Against US Dollar (USD)

The NZD/USD pair has fallen to a two-month low of 0.6039 after the release of inflation data on Wednesday. This decline marks the second consecutive day of losses for the currency pair, with trading hovering around 0.6060 during Asian trading hours.

New Zealand’s CPI Figures and Reserve Bank Target

  • New Zealand’s Consumer Price Index (CPI) rose by 2.2% year-over-year in the September quarter.
  • This figure falls within the Reserve Bank of New Zealand’s (RBNZ) target range of 1% to 3%.
  • Inflation in New Zealand has slowed to its lowest level in over three years, with a 0.6% quarter-over-quarter increase in September.

Nicola Growden, the consumer prices manager at Stats NZ, highlighted that annual inflation is now within the RBNZ’s target range, indicating a slower rate of price increases compared to previous periods.

US Economic Factors Impacting NZD/USD

  • The US Dollar (USD) has received support from strong jobs reports and inflation data, leading to reduced expectations for aggressive easing by the Federal Reserve (Fed).
  • Market forecasts suggest a total of 125 basis points in rate cuts over the next year.
  • According to the CME FedWatch Tool, there is a 94.1% probability of a 25-basis-point rate cut in November.

Atlanta Fed President’s Rate Cut Projections

Atlanta Fed President Raphael Bostic anticipates just one more interest rate cut of 25 basis points in 2024. This projection aligns with his previous statements during the US central bank meeting last month.

Economic Indicator: Consumer Price Index (YoY)

The Consumer Price Index (CPI) is a key indicator released by Statistics New Zealand on a quarterly basis. It measures changes in the price of goods and services purchased by New Zealand households, serving as a crucial tool to monitor inflation and purchasing trends.

The YoY reading compares prices in the reference quarter to the same quarter a year earlier. A high reading is considered bullish for the New Zealand Dollar (NZD), while a low reading is viewed as bearish.

Key Statistical Data

  • Last Release: Tue Oct 15, 2024 21:45
  • Frequency: Quarterly
  • Actual: 2.2%
  • Consensus: 2.2%
  • Previous: 3.3%
  • Source: Stats NZ

Overall, the decline in the NZD/USD pair following New Zealand’s CPI data release reflects a complex interplay of domestic and international economic factors. Understanding these dynamics is essential for investors and traders looking to navigate the currency markets effectively.

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