Following the 6.9% increase in the NZ Consumer Price Index (CPI) announcement, the NZD/USD pair has plummeted to approximately 0.6796.

The annual NZ inflation rate was at 5.9%, which was lower than the market forecast of 7.1 per cent but much higher than the previous print of 5.9%. The quarterly CPI print in New Zealand came in at 1.8 per cent. The last measurement was 1.4 per cent, and the preliminary reading was 2 per cent.

Statistics’ Consumer Price Index, a measurement of retail prices of a sample shopping basket of products and services, are in New Zealand to determine price trends. Inflation has reduced the purchasing power of the New Zealand dollar. The Consumer Price Index (CPI) measures inflation and changes in purchasing patterns. A high value indicates that the NZD is positive (or bullish), while a low reading is bearish.

Meanwhile, profit-booking headwinds have brought the US Dollar Index (DXY) down by 0.80 per cent from its recent high of 101.03 on Wednesday. Long-liquidations arose from the DXY’s high values. However, market players should not expect a turnaround just soon.

The dollar will stay strong ahead of the Federal Open Market Committee (FOMC) meeting on May 4, and long-end yield spreads might narrow further.

Conclusion

Over the last two weeks, the NZD/USD pair has been on the lower track. According to Westpac experts, the pair may retest 0.6715 during its short-term decline.