When is NZ CPI and how might it affect NZD/USD?

The key event for the Asian markets today is in the NZ CPI data that arrives 30 minutes past the coming hour (22.30GMT). The market is looking for Q1 CPI +0.8%q/q vs 0.4% previous. Excluding food and fuel, however, it is likely to be closer to +0.2%. For year on year, the market is looking for 2.0% vs 1.3%. However, analysts at TD Securities suggested that it isn’t this CPI that matters, "but whether inflation expectations jump afterwards."

How could the outcome affect NZD/USD?

In respect of the bird, they may not be much of a reaction to this event despite there being previous volatility around the event to the tune of a 60 pip range. Timing wise, and as analysts at ANZ explained, the CPI increase is being driven primarily by a now-rapidly-expiring lift in oil prices and food prices, as well as seasonal and base effects. "The RBNZ was reasonably explicit in March that it is discounting the impact of “one-offs”. the RBNZ is in no hurry to raise rates, relying on macroprudential measures to cool housing as it waits and watches."  

However, should the data miss in any significant way, the Kiwi has the 200-hr sma at 0.6999 as a key support guarding 14th April lows at 0.6975, while to the upside, the 20 sma on the same time frame is located at 0.7015 guarding 17th April highs of 0.7035.

Key Notes

Will NZ CPI be back on target? - ANZ

About NZ CPI

Consumer Price Index released by the Statistics New Zealand is a measure of price movements by the comparison between the retail prices of a representative shopping basket of goods and services . The purchase power of NZD is dragged down by inflation. The CPI is a key indicator to measure inflation and changes in purchasing trends. A high reading is seen as positive (or bullish) for the NZD, while a low reading is seen as negative.