The NZD/USD pair snapped its two-day losing streak on Wednesday. The pair edged slightly higher and was trading at $0.6935 earlier that day.
New Zealand’s Inflation Outlook
The Reserve Bank of New Zealand (RBNZ) released its interest rate decision earlier on Wednesday. According to data published by the RBNZ, the Monetary Policy Committee agreed to maintain the current stimulatory level of monetary settings. The Official Cash Rate (OCR) was kept at 0.25% for the time being.
The decision followed the Government’s imposition of coronavirus restrictions on activity across New Zealand. The Committee stated that they would continue assessing the inflation and employment outlook on an ongoing basis. They plan to reduce the level of monetary stimulus overtime to meet their policy remit.
Rising vaccination rollouts across most countries have provided an economic incentive. The rise in activity has also continued to boost demand and commodity prices for New Zealand’s exports. Global monetary and fiscal settings have been maintained at accommodative levels, supporting international spending.
Statistics New Zealand released the country’s PPI input and output data for the second quarter. The Producer Price Index Input climbed 3.0%, boosted by a rise in electricity prices. The PPI output jumped 2.6%.
Prices paid by electricity and gas supply producers rose 17.0% in the June quarter, while prices received for production advanced 14.3%. The input prices were just shy of the record level reported in 2008, while the output prices were the highest in the series.
The NZD/USD will react to the US building permits data later in the day. The building permits for July are expected to increase to 1.610 million. In the same month, the housing starts are expected to inch lower.
NZD/USD Technical Analysis
NZD/USD has been nearly range-bound for the past two months. The currency pair hit an intraday low of $0.6869 before rebounding.
On the daily chart, it is trading below the 25 and 50-day exponential moving averages, hinting at a bearish trajectory.
Therefore, the pair is likely to face a minor retracement before advancing. If this happens, the bulls will be eyeing the next target at $0.7100. On the flip side, a move below the intraday low could invalidate this view.