NZD/USD is ending the North American session down by some 0.9% after falling from a high of 0.7132 to a low of 0.7062 on the day. A stronger than expected US Consumer Price Index data overnight saw the USD rally against all G10 currencies.
The US Consumer Price Index rose 0.9% last month after gaining 0.4% in September and in the 12 months through October, the consumer price index accelerated 6.2%. the US Labor Department said on Wednesday, while analysts expected on average the rise to be limited to 5.8%.
The markets have responded in kind following the Federal Reserve last week restating that the current inflation surge will be transitory. However, today's data comes in stark contrast to such a belief. meanwhile, the NZD was the second-best performer although remains pressured due to the US data casting doubt on the idea that the Fed can remain patient. ''The NZD’s resilience is pretty understandable given that markets have already come to grips with high NZ CPI and hefty rate hikes are already priced in,'' analysts at ANZ Bank argued.
''The NZD has the potential to respond very positively to the next couple of Reserve Bank of New Zealand OCR hikes (especially if one of them is 50bps), but as we head into 2022, with mortgage rates already well higher and the Fed then likely eyeing hikes, that timing mismatch could be a real challenge for the NZD. So maybe this isn’t as good as it gets, but it may not be too far off it.''
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