New Zealand, Auckland

The NZD/USD pair inched slightly higher after the RBNZ monetary policy statement. The pair has been on a downward trend since the start of the week. However, it snapped from its losing streak on Wednesday and advanced 0.97% to trade at 0.70147.

NZD/USD Outlook

RBNZ Monetary Statement

The Reserve Bank of New Zealand (RBNZ) released its monetary policy statement earlier on Wednesday. This saw the NZD/USD pair edge slightly higher after declining for two consecutive days.

The RBNZ Monetary Policy Committee agreed on reducing its current stimulus to meet its consumer price and employment objectives. The Reserve Bank announced its plans to cease additional asset purchases under the Large-Scale Asset Purchase program by July 23.

The committee maintained its current Official Cash Rate at 0.25%. It also kept the Funding for Lending Program intact.

According to the committee, the global economic recovery has supported the price of New Zealand’s export commodities. Global monetary and fiscal settings are maintained at accommodative levels hence supporting New Zealand’s economic recovery.

According to recent data released, the New Zealand economic recovery has been positive despite the international border restrictions. The country’s aggregate economic activity jumped above its pre-pandemic levels.

The committee signaled near-term surges in the headline Consumer Price Index for the June and September quarters. The committee agreed to the scaling down of its monetary stimulus to reach its support.

US Inflation Concerns

The NZD/USD pair inched lower on Tuesday after the release of the better-than-expected Consumer Price Index (CPI) for June. The CPI rose 5.4% compared to the previous year. This was the fastest inflation surge in 13 years.

The core CPI, less food and energy, climbed 4.5% YoY, surpassing the 3.8% estimate. This was the sharpest rise since September 1991. Used cars and trucks were among the biggest contributors to the jump in June’s CPI.

The headline and core prices advanced 0.9% MoM beating the 0.5% forecast. However, despite the surge in inflation, the US stock market dipped. Investors have shifted their focus to Jerome Powell’s semi-annual testimony before the congress on Wednesday and Thursday.

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