When is the NZ CPI, and how could it affect the NZD/USD?

New Zealand quarterly CPI overview

New Zealand will be dropping the Consumer Price Index figures for 2018's first quarter at 22:45 GMT late Tuesday, and expectations are for a modest 0.5 percent increase in the quarter-over-quarter figure which last posted a meager gain of 0.1 percent, while the year-on-year number is expected to come in at 1.1 percent, a slight decline from the previous reading of 1.6 percent.

NZ CPI: more noise than signal? - ANZ

With the Reserve Bank of New Zealand's (RBNZ) recently expanded mandate to include employment stability along with inflation and price control, the RBNZ will be looking at inflation figures closely as they examine ways to both mitigate and control both job creation and price inflation within the New Zealand economy. As analysts at ANZ noted, the RBNZ is increasingly unlikely to make a move on monetary policy as headline inflation remains in hiding: "The fall in annual headline inflation is more noise than signal. Nonetheless, evidence of a broadening in domestic price increases beyond housing remains elusive. Core inflation measures are expected to be broadly stable. We suspect the RBNZ will continue to bide its time until there’s a little more certainty that inflation is set to rise."

How could it affect the NZD/USD?

A clean miss for the figures will obviously provide fodder for the bears, but an upside swing could provide buyers with just enough confidence to shake the Kiwi out of its recent bearish downturn, although as FXStreet's Flavio Tosti notes, the pair is already looking decidedly bearish: "the pair has a bearish slant. Support lies at 0.7003 low of the day and then at 0.7243 swing low. On the other hand, resistances are priced in at 0.7340 supply level and at 0.7396 cyclical high."

Westpac is equally bearish on the Kiwi's outlook heading into the inflation figures, noting that, "The dip in annual inflation is partly a timing issue that is likely to be short-lived. However, we expect inflation to remain on the lower side of the Reserve Bank’s inflation target for some time yet.”

Key notes

NZ: CPI likely to post a 0.5% rise for the March quarter - Westpac

NZD/USD trades above 0.7300 ahead of New Zealand inflation

About the New Zealand Quarterly CPI

Consumer Price Index released by the Statistics New Zealand is a measure of price movements by the comparison between the retail prices of a representative shopping basket of goods and services . The purchase power of NZD is dragged down by inflation. The CPI is a key indicator to measure inflation and changes in purchasing trends. A high reading is seen as positive (or bullish) for the NZD, while a low reading is seen as negative.