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NZ Inflation Higher Than Expected | U.S Retail Sales Fall Sharply

Published October 17, 2019

The Kiwi Dollar opens at similar levels to yesterday despite an eventful 24 hours which saw the currency trade a 1 cent range. The NZD was initially well supported yesterday morning after higher than expected CPI numbers, before falling later in the day after comments from RBNZ Deputy Governor Bascand who said that lower rates may still be needed to achieve the banks inflation and employment goals. The Kiwi weakness continued throughout the day before bouncing back sharply overnight as the US Dollar lost ground on weaker than expected retail sales data. In other news, the UK, Euro Zone, and Canada all released softer than expected inflation data overnight.

NZ Inflation Higher Than Expected

The NZD was firmer yesterday morning after stronger than expected 3rd quarter inflation. CPI increased by 0.7% in the September quarter, bringing the annual rate of inflation to 1.5%, down from the 1.7% level reported in June, but ahead of market expectations of 1.4%. Most analysts are still expecting a rate cut from the RBNZ in November, and this view was backed up by Deputy Governor Bascand’s comments.

U.S Retail Sales Fall

The USD was broadly weaker after soft sales data released overnight. Retail sales fell by – 0.3% in September, below market expectation for an increase of 0.3%.

Brexit Optimism Continues

The British Pound continued to make gains, reaching a five month high, as hopes of a Brexit agreement continue to build. Last minute negotiations are underway between the UK and EU, and there was hope they would agree on a deal before tonight’s EU Summit, however this has since been dismissed by government sources.

Looking ahead, the big event today is the Australian employment report, due out at 1.30pm this afternoon.