The impact of the FOMC announcement early this morning made NZD/USD remain weak even though New Zealand inflation increased significantly in the fourth quarter of 2021.
On Thursday (27/January), the New Zealand Bureau of Statistics released annual Consumer Inflation (Year-over-Year) data which increased from 4.9 percent to 5.9 percent in the fourth quarter of 2021. This increase is quite significant because it managed to exceed economists' expectations for growth 5.7 percent.
New Zealand's annual inflation growth was supported by increases in housing prices and household utilities by 7.6 percent. In addition, fuel prices soared 15 percent and food prices recorded an increase of 4.1 percent. Other sectors increased slightly and communications was the only sector that experienced a decline in annual calculations.
However, on a quarterly basis (Quarter-over-Quarter), inflation slowed from 2.2 percent to 1.4 percent. Nevertheless, this achievement is still better than the projected decline to 1.3 percent.
Overall, New Zealand's inflation trend increased quite significantly throughout 2021. This morning's statistics also showed an increase in inflation excluding food and housing costs which increased by 6.4 percent and 5.3 percent, respectively.
NZD/USD tumbles after the Fed's announcement
New Zealand inflation data which was quite impressive this morning failed to support the movement of the NZ Dollar against the US Dollar. The reason is, the impact of the Fed's policy announcement is stronger so that selling still dominates NZD/USD. At the time of writing, NZD/USD was down 0.57 percent from its daily open price and was trading around 0.661.
In last night's policy announcement, the Fed clearly signaled a rate hike in March, triggering massive buying of the US Dollar. Moreover, the prospect of four Fed rate hikes this year has made the strengthening of the US Dollar increasingly unstoppable. Commodity currencies such as the New Zealand Dollar were also affected by the worst declines.
Post a Comment for "NZD/USD Slumps Despite New Zealand Inflation Rises "