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New Zealand Dollar Sinks as CPI Data Misses Estimates

New Zealand Dollar Sinks as CPI Data Misses Estimates

Christian Lewis, Contributor

Talking Points

  • 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.

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