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New Zealand Dollar supported by local CPI numbers reducing the chance of a rate cut

NZD - New Zealand Dollar

The New Zealand Dollar pushed through the psychological level of 66c against the Greenback intraday Friday after local CPI figures surprised to the upside dampening a further cut by the RBNZ. The headline CPI numbers released on Friday showed a rise of 0.5% in the last quarter of 2019 bringing the headline number to 1.9%. Fuel costs, rent and airfares soared and now set’s a tone for the RBNZ to hold on their rate moves next month and maybe even longer. Rents rose 0.8% in the December quarter, and 3.1% year-on-year - the highest annual increase since the September 2008 quarter. NZD/USD pair touched a high of 0.6629 before the Asian markets passed the baton to over to the Europeans where NZD/USD sat comfortably in a 30-pip range between 0.6599 and 0.6629. Meanwhile, there was little reaction from the Kiwi to NZ credit card spending numbers which showed a decline to 3.4%, expected was 4.3%

Looking ahead, there are no scheduled releases locally, traders will be looking to Thursdays trade data as numbers should reiterate the resilience of exports and move back into positive territory. From a technical view point, NZD/USD supports sits at 0.6580, on the upside, resistance lies at 0.6630.

Key Movers

The US Dollar Index which measures the strength of the Greenback against a basket of six major currencies rose on Friday as data showed ongoing strength in the U.S. services sector offset a continued slowing in manufacturing to a three-year low. The IHS Markit flash purchasing managers index for manufacturing in fell to a 3-month low in January, while the services PMI strengthened to highest level since last March.

GBP/USD pulled back from two-week tops and dropped to a low of 1.3056 failing to capitalize on upbeat PMI data with speculation of Bank of England cutting rates prompted some selling. Markets are still pricing in a 45% of the BoE cutting rates this week. Meanwhile, EUR/USD hit seven-week lows after data revealed Eurozone growth was left muted at the start of 2020 with January’s PMI data expanding at the same pace that was seen in December 2019.

Expected Ranges

NZD/USD: 0.6580 - 0.6630 ▼

NZD/AUD: 0.9580 - 0.9740 ▲

GBP/NZD: 1.9600 - 1.9900 ▼

NZD/EUR: 0.5940 - 0.6040 ▲

NZD/CAD: 0.8610 - 0.8790 ▲