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NZD/USD Steady as Chinese CPI Data Expands

NZD/USD Steady as Chinese CPI Data Expands

Bradley Kearns, Contributor


Talking Points:

  • China’s CPI (consumer inflation) rose 1.5 percent in November versus the 1.4 percent estimate
  • PPI (factory inflation) contracted -5.9 percent, beating the markets’ forecast of -6.0 percent deflation
  • Australian and New Zealand Dollar little-changed as traders await Aussie jobs and the RBNZ announcement

Macroeconomic events affect currency valuations. Stay updated with major releases on our calendar.

Neither the AUD/USD nor NZD/USD exchange rate responded significantly to the Chinese inflation statistics that crossed the wires Wednesday morning. The consumer price gauge (CPI) for the month of November rose 1.5 percent (year-over-year), which surpassed the 1.4 percent consensus forecast and the 1.3 percent print last period.

Wholesale expenses fell at a rate slower than traders’ anticipation of -6.0 percent (YoY) drop. The PPI figure for November matched its October reading by contracting -5.9 percent. These inflation figures follow a global trend of diminished price pressures that has encouraged many global central banks to pursue accommodative monetary policy. The People’s Bank of China (PBoC) has followed a similar route, but its tools are dissimilar from the rate cuts and large-scale QE programs employed by central banks in the west due to its dissimilar financial system. That said, the economic implication from deflated price pressures is distinctly felt and a dilemma officials must face.

Both the Aussie’s and Kiwi’s lukewarm reaction may reflect the markets’ distraction with more distinctive event risk ahead. It is understandable a reluctance to commit to a directional bias ahead of the Aussie jobs figures or the RBNZ’s upcoming rate decision. According to forecasts, Australia is expected to report a net 10,000 decline in national payrolls while overnight index swaps are pricing in a 62 percent probability that the central will lower its base lending rate to 2.50 percent from the current 2.75 percent.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.