Kiwi gains as inflation comes into focus
The New Zealand dollar gained ahead of food price and inflation expectation reports locally and US inflation data tonight while the greenback weakened against the yen and the Swiss franc.
The kiwi rose to 72.77 US cents as at 8am in Wellington from 72.62 cents late yesterday. The trade-weighted index increased to 74.77 from 74.62.
New Zealand January food prices are due out this morning after a 0.8 percent decline in the previous month which fed into weaker-than-expected fourth-quarter inflation. The Reserve Bank's quarterly survey of expectations today will show whether tepid inflation remains ingrained. Globally, US inflation data for January, out tonight, is the key focus, with the core CPI measure expected to print at 0.2 percent, down from 0.3 percent a month earlier, for a year-on-year rate of 1.7 percent (down from 1.8 percent).
"US CPI tomorrow is the next big test for a market for whom upward inflation surprises have abruptly become A Bad Thing," said Sharon Zollner, chief economist at ANZ Bank New Zealand. "One can be fairly confident that an upside surprise would not be taken well."
She said she expects NZ inflation expectations "will hold around 2 percent, but there are risks of a modest easing which would pressure this cross lower."
The kiwi traded at 92.62 Australian cents from 92.29 cents yesterday. It was little changed at 52.45 British pence and slipped to 58.91 euro cents from 59.06 cents. The kiwi was little changed at 4.5808 yuan and fell to 78.38 yen from 78.82 yen as Japan's currency strengthened against the greenback.