New Zealand CPI slowed notably to 1.1% yoy in Q1, down from prior quarter’s 1.6%, meeting expectation. RBNZ Governor Adrian Orr said in Radio New Zealand interview that he expected “very benign inflation going forward without doubt, as we’ve forecast”.
He added that “what really matters is the confidence and expectation and belief that we are aiming for that midpoint of 2 percent all of the time.” And he pledged that “we are doggedly determined to aim for two percent, but the accuracy around…that is very limited.”
Overall, with CPI now close to bottom of RBNZ’s target band, there is little pressure for the central bank to raise interest rates.
Today’s upside acceleration in AUD/NZD further affirm the case that it’s bottomed in short term at 1.0486. This is supported by bullish convergence condition in daily MACD. Further rise is now likely in near term back to 55 day EMA (now at 1.0683). But the real test will be at 38.2% retracement of 1.1289 to 1.0486 at 1.0793.