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Kiwi sinks as pressure mounts on RBNZ

NZD - New Zealand Dollar

The New Zealand Dollar was the worst performer among G10 currency Wednesday edging back below 0.66 to touch intraday lows at 0.6570. Weak Manufacturing sales data forced investors to revise down Q1 GDP forecasts ahead of next weeks print, mounting more pressure on the RBNZ to cut rates again and reduce the OCR nearer swaps curve average at 1.1%, the cash rate currently sits at 1.5%.

With little of note on today’s domestic docket attentions turn to US CPI inflation data. A soft read will compound last weeks poor non-farm payroll read and heap pressure on the FOMC and Federal reserve to cut rates as early as this month.

Key Movers

The dollar edged lower through trade on Tuesday when measured against a basket of counterparts as attentions turned from trade with Mexico to Trade with China and the ongoing hostilities between the two superpower economies. Economic data signals have showed signs the trade war is beginning to weigh on US domestic growth, amplifying calls for the Federal Reserve to cut interest rates after a sustained period of tightening.

Tuesday saw a tepid increase in produce prices suggesting todays CPI print will provide little in the weigh of upward price momentum. A soft inflation read followed by a slow down in domestic retail sales on Friday would add further evidence that tariffs are slowing the economy and in this low inflation environment stagnating growth becomes all the more critical in front running monetary policy change. With swap pricing and forward points moving against the USD the tide of upward momentum for the worlds base currency may be turning.

Attentions today remain affixed to US CPI and commentary for ECB president Draghi. Any clues the ECB are willing to ease policy further will weigh on the combined unit.

Expected Ranges

NZD/USD: 0.6530 - 0.6630 ▼

NZD/EUR: 0.5750 - 0.5850 ▼

NZD/GBP: 0.5141 - 0.5215 ▼

NZD/AUD: 0.9420 - 0.9505 ▼

NZD/CAD: 0.8690 - 0.8780 ▼