New Zealand Dollar gathers strength on mixed Chinese economic data
The New Zealand Dollar (NZD) trades on a stronger note on Thursday. The recent mixed Chinese economic data helps limit the NZD’s losses. It’s worth noting that any signs of recovery in the Chinese economy generally lift the Kiwi as China is New Zealand's largest trading partner. Additionally, further confirmation of the downward path of US inflation has triggered the expectation of the Federal Reserve (Fed) interest rate cut in September. This, in turn, might drag the US Dollar (USD) lower and create a tailwind for NZD/USD.
Nonetheless, the dovish stance of the Reserve Bank of New Zealand (RBNZ) after a surprise rate cut on Wednesday might exert some selling pressure on the NZD as the easing cycle came much sooner than expected. Later on Thursday, traders will keep an eye on US Retail Sales, weekly Initial Jobless Claims, the Philly Fed Manufacturing Index and Industrial Production.
Daily Digest Market Movers: New Zealand Dollar recovers after the Chinese economic data
- China’s Retail Sales jumped by 2.7% YoY in July, compared to 2.0% seen in June, beating market expectations, the National Bureau of Statistics of China reported on Thursday.
- Chinese Industrial Production came in at 5.1% YoY in July from the previous reading of 5.3%. This figure was weaker than the estimation of 5.2%.
- RBNZ Governor Adrian Orr said early Thursday that the central bank is maintaining a suitably restrictive policy stance and is likely looking at gauging when to enact future rate reductions.
- RBNZ board members decided to cut its Official Cash Rate (OCR) by 25 basis points (bps) from 5.50% to 5.25%. The market participants expected a rates-on-hold decision.
- Board members agreed that policy will need to remain restrictive for some time to ensure that domestic inflationary pressures continue to decline, according to the minutes of the RBNZ interest rate meeting.
- During the press conference, RBNZ’s Orr said that he is confident inflation back in its target band can commence re-normalising rates. Orr further stated that the central bank considered a range of moves; the consensus was for 25 bps.
- The US headline Consumer Price Index (CPI) increased 2.9% YoY in July, compared to a rise of 3% in June, below the market consensus. The Core CPI climbed 3.2% YoY following a rise of 3.3% seen in July, in line with the market forecast.
Technical Analysis: New Zealand Dollar maintains a negative outlook
New Zealand Dollar price in the last 7 days
The table below shows the percentage change of New Zealand Dollar (NZD) against listed major currencies in the last 7 days. New Zealand Dollar was the weakest against the Australian Dollar.
