The New Zealand Dollar (NZD) rose initially off the back of US weakness to just shy of 0.6900 levels into Wednesday buoyed also by buyer interest post the RBNZ announcement. The RBNZ raised their cash rate to 1.5% from 1.0% the first time we have seen a rise of 50 points since November 1999 signalling a hard view of the need to bring down rising inflation. CPI is predicted to peak to over 7% amid this tightening cycle, the central bank felt the need to go hard sooner rather than later. Inflation in the US hit a 40 year high of 8.5% midweek the highest it’s been since December 1981- this was slightly higher than forecasts at 8.4%. The main influencer being energy prices with Gas up 48% and energy 32%, food also jumping nearly 9%. The war in Ukraine produced a perfect storm of supply and demand woes and cementing expectations that the Federal Reserve will raise rates again by 50 points at their May meeting. We have key data out tonight with US Retail Sales before Fed member Mester speaks. On the chart, the bull channel in place since late January looks to have broken down this week signalling possible further downside for the kiwi.
The current interbank midrate is: NZDUSD 0.6802
The interbank range this week has been: NZDUSD 0.6752- 0.6899