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Kiwi seen supported but likely faces weak-economy pressure after July inflation

Commerzbank points to New Zealand’s core inflation easing to 2.2% year-over-year in July, suggesting the RBNZ could hold rates in September while staying hawkish due to Middle East risks.

Reported · Written up by our desk · Central Banks

Commerzbank strategist Volkmar Baur said New Zealand’s softer inflation readings make a September rate hike by the Reserve Bank of New Zealand unlikely after its July move.

The firm cited New Zealand Stats NZ data showing the Selected Price Index fell to 3.5% year-over-year in July from 4.9% in June, with core inflation easing to 2.2% from 2.8% when gasoline and diesel effects were excluded.

Commerzbank also pointed to economic signals as a counterweight, noting credit and debit card sales rose by 3.5% year-over-year in July after slowing in June, with core sales up 0.4% year-over-year earlier.

Still, Commerzbank expects the RBNZ to keep a hawkish tone amid Middle East risks that could affect oil prices, which it said may support the kiwi near term but that a weak economic backdrop could weigh on the currency over the coming months, according to FXStreet.

Latest closeGasoline (RBOB) $2.901 ▼7.3%

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