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16/07/24
153
NZD Sharply Lower
On Tuesday, the New Zealand dollar posted sharp losses for the second straight day and NZD/USD traded at about 0.6042, down 0.54% for the day in the North American session.
This week, the New Zealand dollar has dropped 1.3% and traded at the lowest level since May 15.
On Wednesday, New Zealand will release its inflation report for the second quarter. The market consensus is at 3.5% y/y, versus the first quarter’s 4%. It is expected inflation will stay steady at 0.6% quarterly.
The inflation report will likely be a key factor at the Reserve Bank of New Zealand’s rate meeting on August 14. At last week’s rate meeting, the central bank surprised markets with its dovish stance. Although the RBNZ kept the cash rate unchanged at 5.5% as expected, it opened the door for rate cuts if inflation drops as expected.
The dovish stance means that the next meeting will be live. Although the RBNZ discussed a rate hike at the May meeting, it made an unexpected shift at the meeting in July and noted that it was worried the economy would ease faster than it had anticipated.
Retail sales in the US dropped in June to 2.3% y/y, down from May’s 2.6% but higher than the estimate of 2.1%.
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