US Inflation cooled to its lowest level in two years in March to 5.0% y/y sending stocks lower and the kiwi unexpectedly higher to 0.6240. Inflation remains far higher than the Fed would care to admit targeting 2.0% leaving us to speculate as to whether the central bank will raise rates at the May 3rd meeting. We suspect so by 25 points which should give the greenback some fundamental upside over the remainder of April trading. Expectations are for the Fed to have started aggressively cutting rates by the end of the year. Lower US yields should push equity markets higher and therefore the NZD should go along for the ride. Downside bias in the kiwi may gather momentum in the long run.
The current interbank midrate is: NZDUSD 0.6207
The interbank range this week has been: NZDUSD 0.6180- 0.6251