New Zealand CPI q/q 01/19/10

4:45pm (NY Time) NZ CPI q/q    Forecast 0.0%   Previous 1.3%
ACTION: NZD/USD       BUY 1.1%      SELL 0.5% 

Our focus will be on the headline CPI number. If we get a better than expected number of 0.0% by 0.3%, we should be looking to BUY NZD/USD; if we get a lower -0.3%, then we’ll see NZD/USD move down.

With recent RBNZ (Reserve Bank of New Zealand) unexpected hawkish statement by Governor Bollard, market is widely expecting RBNZ to hike interest rate mid this year, following its neighbor Australia as both economies are closely correlated.  As this release will undoubtedly push that speculation to a new level since it would either give RBNZ Governor Bollard justification to hike rates, or turn speculation of an early rate hike off.  

With the lower than normal liquidity condition at the scheduled time of this release, expect the market to react either exaggerated or hardly at all.  I’d just skip this release unless you are going to be around during the scheduled time.

DEFINITION:

“The Consumer Price Index (CPI) measures the rate of inflation (i.e., the rate of price changes) experienced by consumers when purchasing goods and services. A rising trend has a positive effect on the nation’s currency. The primary objective of the central bank is to achieve price stability; when inflation rises above an annualized rate of approximately 2%, they will respond by raising interest rates to bring prices down. Higher interest rates attract foreign investment, thus increasing demand for the nation’s currency. CPI is one of the most closely watched indicators and will usually have a high impact upon release.”

Related posts:

1. New Zealand CPI q/q 10/14/09
2. ECB Minimum Bid Rate Decision (Interest rate decision) 12/03/09
3. Canada BOC Overnight Rate Decision 10/20/09
4. BOC Overnight Rate Decision (Interest Rate Decision) 12/08/09
5. ECB Minimum Bid Rate Decision 09/03/09
6. Canada BOC Overnight Rate Decision 09/10/09
7. ECB Minimum Bid Rate Decision 11/05/09
8. RBA Cash Rate Decision 11/02/09
9. RBA Cash Rate Decision 11/30/09 (Interest Rate Decision)
10. ECB Minimum Bid Rate Decision 10/08/09