New Zealand is printing its quarterly CPI this week! Will the report convince the RBNZ to cut its rates in May?
Quarterly CPI report (Apr 16, 11:45 pm GMT)
Consumer prices in New Zealand rose by another 1.9% from a year ago in Q4 2018, which is just above market estimates of a 1.8% uptick and in line with Q3’s annualized reading. That’s also the highest level in five quarters, yo!
On a quarterly basis, prices had risen by 0.1%, slower than Q3’s 0.9% gain but faster than expectations of a flat reading.
Bulls rejoiced at the better-than-expected release at the time as they believed that the strong price growth would be enough for Reserve Bank of New Zealand (RBNZ) to hold off their dovish sentiments. We now know that the central bank IS dovish enough to consider a rate cut after all.
This week analysts expect to see annual prices slow down to only a 1.7% growth in Q1 2019. Meanwhile, the quarterly reading is estimated to speed up from 0.1% to 0.3% for the period.
Governor Orr recently said that he doesn’t know yet about any rate cuts in May. If this week’s CPI numbers miss significantly, then traders could price in one anyway. But if it prints to the upside as it did last time, then the Kiwi might extend its gains from last week.
China’s GDP release and overall risk sentiment
On Wednesday at 3:00 am GMT the world’s second largest economy will print a bunch of closely-watched reports including its quarterly GDP, fixed asset investment, industrial production, and retail sales data.
We know from last week’s price action that Kiwi reacts to China’s major data releases. Watch out for significant hits or misses that could affect the Kiwi’s price action!
Meanwhile, keep close tabs on potential catalysts from other major economies. While a lot of them (including New Zealand) will be closed for Easter holidays near the end of the week, some of them also have top-tier reports on tap. Make sure you mark them on your forex calendars!
Missed last week’s price action? Read NZD’s price recap for April 8 – 12!