The greenback and the US CPI are putting pressure on the New Zealand dollar.
The RBNZ Monetary Policy Review is crucial for the New Zealand dollar today.
NZD/USD is near 0.5 percent lower in the early Asian session, having fallen from a high of 0.7009 to lows at 0.6920.
In the US sessions, the focus was on the US Consumer Price Index, which easily outperformed expectations, strengthening the dollar and US rates.
The moves were, however, partially continued since the facts matched the Federal Reserve’s ‘transitory’ story. As a result, equities were weaker, putting more pressure on the bird.
The Reserve Bank of New Zealand will be the focus of attention for the rest of the day.
“The question is whether they will be able to match the market’s strong belief that rate hikes will occur this year.” With these expectations in place, it may be difficult for the RBNZ to surprise with a hawkish move, limiting NZD upside,” according to ANZ Bank analysts.
“With an admission of the much stronger-than-expected starting position but also significant uncertainty about the forecast, particularly the critical question of the continuation of inflation pressure,” the analysts continued, “there will be something for everyone in the Review.”
“However, in our opinion, the balance of potential regrets has skewed solidly in favor of maintaining excessively stimulating conditions for an extended period of time, and we expect the Committee to reach the same judgment.”/n
