New Zealand Dollar Sinks as CPI Data Misses Estimates
- NZD/USD sinks after worse-than-expected second-quarter CPI data
- 2Q inflation was 0.4% (YoY) versus 0.5% expected and 0.4% in 1Q
- Soft inflation numbers increase the markets’ speculation for rate cut
The Kiwi Dollar sank against its US counterpart as worse-than-expected New Zealand inflation figures crossed the wires, fueling RBNZ interest rate cut speculation. The headline year-on-year inflation rate registered at 0.4 percent, falling short of expectations calling for a reading of 0.5 percent.
New Zealand bond yields fell alongside the NZD/USD after the data crossed the wires. This could mean that there are greater expectations from the market for a rate cut at the upcoming RBNZ rate decision. Overnight index swaps (OIS) imply that the market now sees a 70 percent chance for an August cut.