Baxia Markets
October 17, 2023

NZDUSD Weighs CPI Data - Bearish Momentum Amid Soft Inflation?

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NZDUSD demonstrated strength on Monday, initiating with a gap-up move. However, the optimism stemming from the gap is at risk of being eroded due to the release of underwhelming CPI economic data.

Statistics New Zealand's report unveiled that inflation in New Zealand, as measured by the Consumer Price Index (CPI), registered a 1.8% increase in the three months up to September. This figure fell slightly below market expectations, which had anticipated a rate of 2%. The annual comparison revealed a 5.6% increase, a drop from the prior 6% reading and falling short of the projected 5.9%.

Unsurprisingly, the New Zealand Dollar (NZD) faced a decline in response to this news, with NZD/USD dropping toward the 0.5900 level. Immediate market reactions to the data release often drive such fluctuations.


NZDUSD Weighs CPI Data - Bearish Momentum Amid Soft Inflation?

NZDUSD Technical Overview

In terms of technical analysis, when observing the classic EMA indicators, specifically the 50 and 200 period EMAs, NZDUSD's performance trends bearish. This sentiment was further reinforced by the occurrence of a death cross late last week, marking a bearish shift in market dynamics.

Additionally, NZDUSD currently hovers below the value area, shaded in pink, of the volume profile. This suggests that the market views NZDUSD as undervalued.

The MACD histogram and signal line both linger beneath the 0-level, signifying a bearish sentiment among market participants.

Furthermore, the anchored VWAP indicator, based on data from Monday's high, points to a bearish outlook. This is primarily due to the price residing near the second lower band of the anchored VWAP. A potential shift to a bullish scenario could occur if NZDUSD manages to climb above the first upper band of the anchored VWAP, positioned at 0.5923.

Key Economic News to Watch Today

New Zealand, CPI YOY

Actual 5.6% vs Forecast 5.9%

New Zealand, CPI MoM

Actual 1.8% vs Forecast 1.1%

US, Core Retail Sales

Forecast 0.2%  vs Previous  0.6%

US, Retail Sales

Forecast 0.3%  vs Previous  0.6%


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