Global Themes

Kiwi jumps on higher-than-expected inflation

The NZDUSD jumped to one-month highs this morning after a stronger-than-expected result from NZ inflation.

Annual inflation rose to 2.2% in the March quarter. The market was looking for a 2.0% annual rate.

While higher oil prices and the alcohol and tobacco tax hike were to blame, the rise also reflect global inflationary pressures.

The NZDUSD was up 0.5% after the announcement as it neared one-month highs.

Negative

Otherwise, the global selldown in shares and commodities continued overnight.

Global sharemarkets were broadly lower with the US’s Dow Jones down 0.6% with the UK’s FTSE 100 down 0.5%. In commodity markets, oil saw the largest losses, with the black gold down 3.7%.

The negativity saw the saw the NZD mostly lower overnight although markets have rebounded following the inflation numbers.

In particular, the NZD was weaker versus the British pound and euro as key political influences drove these markets.

NZDAUD at two-month highs

Today’s focus will be on quarterly Australian business confidence numbers due at 1.30pm.

The NZDAUD has recently traded to two-month highs with a 1.8% gain over the last 48 hours.

From overseas, the US Philly Fed Manufacturing Index and unemployment claims will be the major events.

For more information on upcoming market events, please download our April Risk Calendar.

By Steven Dooley - Currency Strategist

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