Global macro overview for 20/04/2017:
The New Zealand's official inflation rate accelerated faster than expected in the first quarter of 2017. The consumer price index for the first quarter was released overnight at the level of 1.0%, while the forecast was 0.8% (quarter-to-quarter basis). After the news, NZD/USD gained over 0.5% towards the local swing highs at the level of 0.7050. In conclusion, despite the rapid rise in consumer prices (from 0.4% q/q), there are no strong reasons for the Reserve Bank of New Zealand to think of rate hikes sooner than in a year. This is due to the fact that fuel and food prices have been quite volatile amid increased price pressures (food prices rose 2.2% during the quarter, alcoholic beverages and tobacco prices climbed 4%). Moreover, the faster than expected growth was contributed to the fact that the excise tax was increased.
Let's now take a look at the NZD/USD technical picture on the H4 timeframe. After reaching the level of 0.0750, the price reversed and currently is heading lower towards the next technical support at 0.6940. The biggest supply zone is between the levels of 0.7058 - 0.7089 and only a sustained break above this zone would change the current bearish bias to bullish. Otherwise, the price is expected to consolidate and the head lower.
