From today’s release, New Zealand quarterly CPI rose by 0.4% against the expected 0.5%, this not only remained the 7th consecutive quarter in which inflation has been below the 1% mark but also increased the odds of a possible rate cut come August 11. Generally, the ideal inflation targeted by RBNZ comes in at 1.5% but this target hasn’t been reached despite the heated housing market and easing which came in on March when interest rates was cut to 2.25%. We have seen the recent surge of the kiwi-with the recent TWI coming in at 78 and dropping down slightly to 75 after this released, which makes it hard for the RBNZ to control its inflation as the expensive kiwi dampens imports which in turn affect consumer expenditure and this is perhaps will be highlighted in the next unscheduled economic news on July 21.
Let’s check our charts:
From the daily chart, June support trend line was convincingly broken on Friday after US CPI data was released and right now price action is trending towards the 50% Fibonacci level which also represents the 5 month support turned resistance line. We have also seen that the %d line of the stochastics is strong enough meaning bear momentum is strong.
In the 15 min chart, short in the 50-61.8 Fibonacci level as follows if you are not in this trade already:
Sell Limit: 0.7145
TP: Target the 100% Yearly Fibonacci level, so trail profits.
Have a good trading day