NZD/USD Struggles Against Stronger US Dollar Despite Elevated RBNZ Inflation Expectations

  • The NZD/USD bears are hiding in an attempt to take support from the daily trendline.
  • A Doji candle followed by a daily engulfment could signal that more bears are coming in the days ahead.
  • The RBNZ inflation extensions are at a 31-year high, but the US CPI is already winning out at a 40-year high.

At 0.6658, NZD/USD is down 0.17% on the day as the greenback continues to dominate the top spot in the forex chart. On an hourly basis, the US dollar is leading while commodity currencies are lagging.

In recent trade, the Reserve Bank of New Zealand released its two-year inflation forecast:

  • RBNZ: OCR expectations continue to rise in the short to medium term
  • T1: 3.27% (before 2.96%).
  • OCR expectations continue to rise in the short to medium term.
  • A year ahead of the CPI Inflation expectations hit a 31-year high of 4.40%.
  • Unemployment expectations are at historic lows.
  • Responses to house price expectations show uncertainty in the housing market.

“CPI inflationary pressures are expected to remain strong in the near term, and this should be reflected in rent and food prices next week,” analysts at ANZ Bank reported earlier. to confirm. This should relieve the CPI over time.”

Meanwhile, that failed to move the needle and markets instead consolidate volatility overnight when the U.S. Consumer Price Index came in hot, causing price action to swing both ways the New York day. the data was accompanied by very hawkish comments from James Bullard, a voting member of the Federal Reserve.

His rhetoric sparked a wave of bets on aggressive rate hikes. Bullard told Bloomberg that he would like to see 100 basis points of hikes by July and that rate hikes between meetings could be considered. This has led some Fd watchers to talk of a rate hike ahead of the March meeting. Rate futures have moved to a better chance of a 50 basis point hike next month and more than 160 basis points of tightening by the end of the year.

Data on Thursday showed the U.S. consumer price index rose 7.5% year-on-year in January, a fourth consecutive month above 6% and slightly above economists’ forecast for a rise of 7.3%. Consequently, US Treasury yields jumped and the dollar hit a five-week high of 116.34 yen. Kiwi was bodied for part of the day on a flight to commodities, but turned a dime when Bullard entered the scene and has been under pressure ever since. The New Zealand dollars each fell about 0.3% in morning trading.

NZD/USD technical analysis

According to previous analysis, in which it was noted: ”NZD/USD bulls are supporting a significant correction ”moving” on former lows near 0.67 the figure and towards the neckline from the M formation near 0.6733”, the price hit the target on Thursday. This was between the average reversion of 50% and the ratio of 61.8% as follows:

Preliminary and live analysis of NZD/USD

NZD/USD daily chart

The Doji candle, if followed by a bearish close on Friday, could set the stage for further downside activity into next week:

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