The New Zealand dollar fell against the U.S. dollar Tuesday after October consumer prices rose faster than a Reuters poll estimated, renewing focus on interest-rate differences between the two economies.
October’s seasonally adjusted monthly increase in the Consumer Price Index for All Urban Consumers (CPI) was 0.4%, the Bureau of Labor Statistics (BLS) reported, compared with a 0.6% rise in September. The index excluding food and energy advanced 0.3%. The all-items increase was above the 0.3% estimate for October in a Reuters poll of economists.
Reuters reported the New Zealand dollar was down 0.56% against the U.S. dollar at US$0.56 on Nov. 10. It had traded at US$0.5624 during Asian trading before the release. FXStreet said the pair briefly moved below US$0.5600 and estimated the decline gave back close to half of its post-election advance.
After the inflation figures, markets priced in a nearly 91% chance of a Federal Reserve rate increase in December, Reuters reported. The Fed’s target range was 3.75% to 4.00% after its Oct. 28 decision. The Reserve Bank of New Zealand (RBNZ) had set its Official Cash Rate at 2.75%, leaving the U.S. range one to 1.25 percentage points higher.
Preliminary election results gave National 42 seats, ACT New Zealand 13 and New Zealand First 12, for a combined 67 seats in the 131-seat Parliament. The New Zealand Electoral Commission said the preliminary count did not include an estimated 399,365 special votes still to be checked and counted. Official results are due Nov. 27.
Stats NZ has scheduled the release of October electronic card transactions data for Nov. 12, followed by BusinessNZ’s October manufacturing PMI on Nov. 13. The RBNZ’s next scheduled policy decision is Dec. 9.
