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NZ Inflation number benign as expected.

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

11:15 AM (NZT) The just released inflation data for the 1st quarter 2012 showed an increase of +.5%. This was against a market expectation of +.6%.
This saw little reaction from the market as expected. The RBNZ remain out of play for the time being, with the cash rate unlikely to see an increase before the end of 2012 at this stage.
In the offshore session overnight, there was some interesting action. The nature of sideways range trading in most markets means we see some strange and unusual dynamics. The NZD and JPY were the underperformers. The NZD under pressure as investors lighten exposure following the dramatic 10% fall in the diary prices at Fonterra’s latest monthly auction. There is also evidence of profit taking from bought NZD positions against the AUD, ahead of the Australian inflation numbers next week. These numbers are crucial to the RBA decision the following week, a higher than expected number would cause the most reaction with the interest rate market still up around 90% pried for a 25pt cut at the meeting on the 1st of May.
The Bank of England monetary policy meeting minutes reveal growing concerns about inflation in the UK. With a much lower chance of further QE from the BOE the GBP has enjoyed a rare moment in the sun, being the best performing major currency overnight. The move against the NZD and AUD is particularly welcomed for those waiting tom repatriate funds back to Australasia.
The slow moving train wreck continues in Europe. Increasing political tensions are evident which will likely exacerbate the situation at some stage. The ECB are increasingly being caught between the wishes of the powerhouse Germany to be steadfast on inflationary pressure. And the rest of interested parties, that see prolonged periods of negative growth a credit contraction.
          Past 24 hours
  Current level Pre-NZ CPI  % Chge since NZ CPI   Low High
NZD/USD 0.8159 0.8159 0.00%   0.8142 0.8231
AUD/USD 1.0354 1.0352 0.02%   1.0336 1.0418
NZD/AUD 0.7880 0.7882 -0.03%   0.7863 0.7902
AUD/NZD 1.2690 1.2687 0.03%   1.2655 1.2718
NZD/GBP 0.5092 0.5095 -0.06%   0.5081 0.5163
NZD/EUR 0.6220 0.6223 -0.05%   0.6206 0.6267
NZD/YEN 66.34 66.35 -0.02%   66.15 66.95
NZD/CAD 0.8087 0.8088 -0.01%   0.8070 0.8138