- The Kiwi dollar (NZD) has been the worst performer among the US dollar major pairs in the past five days.
- A further slowdown in New Zealand’s Q3 CPI (5.6% y/y versus 6% y/y in Q2) reinforces RBNZ’s current stance of maintaining its key policy official cash rate unchanged at 5.5%.
- A less hawkish RBNZ may put further downside pressure on the NZD that supports an ongoing major uptrend phase in the EUR/NZD cross pair.
- Watch the 1.7820 key short-term pivotal support on the EUR/NZD.
The Kiwi dollar (NZD) has been the weakest performer among the US dollar major pairs ex-post New Zealand’s general election held over the weekend which saw a change in government towards the centre-right National Party.
Fig 1: USD major pairs rolling 5-day performance as of 17 Oct 2023 (Source: TradingView, click to enlarge chart)
Based on a 5-day rolling performance basis as of 17 October 2023, the USD/NZD has recorded a gain of +2.5% at this time of the writing reinforced by a slowdown in inflationary pressures in New Zealand where its Q3 consumer inflation rate released today inched down to 5.6% y/y from 6% y/y in Q2 and below consensus expectations of 5.9% y/y.
This latest set of CPI data marks the third consecutive quarter of inflationary pressures cooldown from a 22-year high of 7.3% y/y printed in Q2 2022 that supports New Zealand’s central bank, RBNZ current stance of keeping the official cash rate unchanged at 5.5% for a period of time, so far it has held the policy rate steady for three consecutive monetary policy meetings with next upcoming meeting on 29 November.
The ongoing weak performance of the USD/NZD against other US dollar major pairs has led to a resurgence of bullish impulsive sequences in several variable quoted NZD cross pairs such as the EUR/NZD.
Bullish reversal right at major ascending channel support
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