The Australian and New Zealand Dollars are edging lower early Thursday as traders await the release of key reports on Australian labor market conditions and a slew of economic data from China, which could set the tone in the global equity markets. Earlier today, New Zealand released its quarterly report on Consumer Inflation.
New Zealand CPI Drops 0.5% Over June Quarter After Oil Price Slump
Low oil prices drove New Zealand’s consumer price inflation down by 0.5 percent over the June quarter, making for a modest 1.5 percent gain over the June year. The quarterly drop was in line with market expectations.
Stats NZ said transport costs fell by 4.9 percent over quarter, influenced by lower prices for petroleum (down 12 percent).
Today’s annual figure takes inflation well short of the 2 percent mid-point of the Reserve Bank’s 1 to 3 percent target range.
Oil prices slumped over the June quarter as the COVID-19 pandemic drove a sharp fall in the demand at a time when Saudi Arabia and Russia were involved in a price war.
Housing and household utilities rose 0.6 percent, driven by higher prices for rentals for housing – up 0.6 percent).
Stats NZ said the COVID-19 pandemic and subsequent alert level response created some interruptions in data collection and methodological challenges for the quarter CPI.
“They have also created a lot of volatility in the data,” the department said.
Today’s Economic Reports – Australia, China
China’s GDP is expected to have grown by 2.2%, up from -6.8%.
Retail Sales are expected to have grown 0.5%, up from -2.8% last month. And the Unemployment Rate is expected to remain at 5.9%.
Short-Term Outlook – New Zealand Dollar
Today’s CPI results should not alter the view that the Reserve Bank of New Zealand (RBNZ) would need to keep monetary policy settings loose for a long period.
Westpac analysts said, “We think that weak demand will trump supply-side disruptions over the medium term, leading to lower inflation pressures, and the economy is likely to remain below full employment for years to come.”