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NZ Inflation falls dramatically

Written by Sam Coxhead on January 19th, 2012.      0 comments

11:00 AM (NZT) The demand for risk assets continued overnight with better than expected data in the US outweighing some disappointing earnings results. The improved economic data flow in the US over the last couple of months has been surprising and the real question remains, how long can it last?
Adding to the positive sentiment was news that the IMF would look to bolster its war chest, and that Greece was close to a final agreement with bond holders with regards to the level of write downs.
The NZD and AUD remain in demand and defying the global outlook for lower than expected economic growth.
Just released NZ inflation numbers for the 4th quarter show a very surprising fall of -.3% against an expectation of a .4% increase. The main reason was a fall in vegetable prices, down a massive 25% in December and contributing to a 2% fall in food prices for the quarter. This strengthens the argument that the Reserve Bank of NZ will hold the cash rate at its low 2.50% for much, if not all of 2012.
This caused the NZD to soften across the board, albeit not by as much as may have been expected given the dramatic nature of that number.
          Past 24 hours
  Current level Pre-NZ CPI  % Chge since NZ CPI   Low High
NZD/USD 0.8037 0.8073 -0.45%   0.7992 0.8082
AUD/USD 1.0427 1.0435 -0.08%   1.0354 1.0435
NZD/AUD 0.7709 0.7740 -0.40%   0.7696 0.7766
AUD/NZD 1.2972 1.2920 0.40%   1.2877 1.2994
NZD/GBP 0.5206 0.5230 -0.46%   0.5208 0.5249
NZD/EUR 0.6249 0.6277 -0.45%   0.63 0.6295
NZD/YEN 61.72 61.98 -0.42%   61.36 62.09
NZD/CAD 0.8127 0.8165 -0.47%   0.8106 0.8192