NZD Pressured Despite CPI Reaching 32-Year Highs
Heading into today’s European trading session, the risk tone is cautious. Asia-Pacific indices are mixed, volatility measures are elevated, and safe-havens are mixed.
Leading Asia-Pacific indices to the upside is the Nikkei 225 at +1.23%, followed by the Topix at +0.67% and the ASX 200 at +0.31%. The CSI 300 and Hang Seng are both negative on the session at -1.83% and -2.11%, respectively.
In the FX complex, it’s EUR leading the majors to the upside, followed closely by CAD. The latter continues to draw support from yesterday’s CPI report, which reinforced expectations for further aggressive BoC rate hikes.
In contrast and leading to the downside is NZD, which remains pressured due to its disappointing Q1 CPI report. Although CPI printed at its highest level in 32 years and continues to support further policy tightening by the RBNZ, the concern is whether the data can still justify a 50 basis point rate hike.
Looking ahead, today’s focus will remain on inflation and monetary policy, with the release of Eurozone CPI in today’s European session. This will be followed by comments from BoE Governor Bailey, ECB President Lagarde and Fed Chair Powell in the US trading session.
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