NZD Extends 2017 Rally Ahead Of 4Q CPI; Bearish Outlook At Risk

Currency

Last

High

Low

Daily Change (pip)

Daily Range (pip)

NZD/USD

0.7262

0.7277

0.7209

29

68

NZD/USD Daily

 

Chart – Created Using Trading View

  • The New Zealand dollar extends the advance from earlier this month as a gauge for service-based activity hit a 12-month high in December, and the higher-yielding currency may continue to gain ground over the coming days as the region’s 4Q Consumer Price Index (CPI) is expected to increase an annualized 1.2% following the 0.4% expansion during the three-months through September; NZD/USD may continue to retrace the decline from the 2016-high (0.7484) as the pair appears to be breaking out of the downward trending channel carried over from the previous year, with the Relative Strength Index (RSI) clings onto bullish structure from the end of 2016 and highlights a similar dynamic.
  • With the headline reading for inflation projected to expand at the fastest pace since 2014, the Reserve Bank of New Zealand (RBNZ) may adopt a more hawkish tone at the February 9 interest rate decision as ‘annual inflation is expected to rise from the December quarter, reflecting the policy stimulus to date, the strength of the domestic economy, and reduced drag from tradables inflation;’ speculation for a shift in monetary policy may heighten the appeal of the kiwi, but Governor Graeme Wheeler may preserve the status quo and stick to the current script as ‘numerous uncertainties remain, particularly in respect of the international outlook, and policy may need to adjust accordingly.’
  • With the break of the December high (0.7239), topside targets are on the radar ahead of the New Zealand’s CPI print, with the next region of interest coming in around 0.7330 (38.2% retracement) to 0.7350 (61.8% expansion) followed by the November high (0.7403).
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    Author: Travis Esquivel

    Travis Esquivel is an engineer, passionate soccer player and full-time dad. He enjoys writing about innovation and technology from time to time.

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