New Zealand’s CPI Undershoots and Impact on NZD/USD
New Zealand’s third-quarter CPI undershot forecasts, pushing NZD/USD off a four-week high. The pair slipped from just above 0.5700 to just below that mark on the release, returning to levels seen before it broke higher earlier in the session. Prices rose 0.7% quarter-on-quarter versus 0.8% expected, while annual inflation eased to 3.7% from 4.1% against a 3.8% consensus; the Reserve Bank of New Zealand had projected 3.9% in September, and the softer print reduced support for an October 28 rate rise that had been priced during a five-session rally.
Drivers Within the Inflation Print and Technical Impact
Non-tradable inflation ran at 1.0% quarter-on-quarter and 3.3% year-on-year, pointing to weakness in tradables, where petrol and diesel sit. One bank estimated fuel subtracted about 0.4 percentage points from the quarterly rate, and it was alone in forecasting 3.7% year-on-year. The move erased around a tenth of the advance from the October 14 low just above 0.5550, with the rebound failing again near the 50-day EMA just above 0.5700, a level the pair has remained below since early September; momentum had been close to overbought going into the data.
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