ForexLive Asia FX news wrap: Hot New Zealand inflation boosts RBNZ rate hike expectations and the NZD

Author: Eamonn Sheridan | Category: News

Forex news for Asia trading on Friday 16 July 2021

Once again eyes turned to New Zealand, today for the release of Q2 inflation data. The headline CPI came in hot, at 3.3% y/y and 1.3% for the quarter alone. Expectations and market pricing for a near-term cash rate hike from the Reserve Bank of New Zealand rose; while last week the consensus shifted to a hike in November this year this week it has moved to the next meeting, on 18 August. The data today further cemented this view. As an aside, ahead of the mid-August meeting there is official employment data due from NZ on August 4.

NZD/USD was marked higher immediately and has tracked pretty much 0.6990-0.7020 in the hours following the data release. Check out the bullets above for some of the very aggressive rate hike calls from ANZ and Westpac.

AUD/USD failed to follow along with the kiwi, AUD/NZD sliding further.

USD/JPY has been a bit of a mover, trading from lows under 109.80 to above 110. As I post we have had the, as expected, BOJ policy statement and downgrade for economic growth, and an outline of the Bank's climate program:

  • main policy planks are all unchanged
  • the near term GDP growth projection has been cut but further out maintained, in line with the Bank's expected slow recovery for the economy
  • lending for climate-change addressing reasons to be set at 0% for a period of one-year with no limit on the number of rollovers

USD/JPY is barely changed in the wake of the meeting's results. 

Australian dollar against the New Zealand dollar this week. Sad. 

aud/nzd chart rbnz rate hikes

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