The New Zealand Dollar (NZD) dipped to 0.6050 overnight against the US Dollar (USD) just above the yearly low set last week of 0.6037. NZ Inflation expectations kicked off the slump printing at 2.5% but remaining within the 1-3% inflation band almost cementing no further hikes, this was followed by a poor US inflation read. CPI y/y came in at 3.1% in December, down from November’s 3.4% but lower than forecast of 2.9%. Yes it’s a touch lower but not enough to fundamentally make a difference to overall inflation. The Fed will most likely indicate they won’t hike in June. Uncertainty with the next RBNZ decision seems evident with forecasters torn between policy settings and what may come. Certainly, as inflation continues to drop they move closer to the target range of 2.0%, that being said we predict the RBNZ will leave rates on hold until at least the third quarter. If we see the cross fall below 0.6050- 0.6000 it may go much lower.
The current interbank midrate is: NZDUSD 0.6111
The interbank range this week has been: NZDUSD 0.6048- 0.6151