The New Zealand dollar strengthened against other major currencies in the Asian session on Wednesday, after data showed the consumer prices in New Zealand rose on quarter in the first quarter of 2024, as expected.
Data from Statistics New Zealand showed that the consumer prices in New Zealand were up a seasonally adjusted 0.6 percent on quarter in the first quarter of 2024. That was in line with expectations and up from 0.5 percent in the three months prior.
On a yearly basis, inflation rose 4.0 percent - above forecasts for 4.5 percent and down from 4.7 percent in the previous three months.
The upbeat CPI data from New Zealand spurred the traders to expect that the Reserve Bank of New Zealand is unlikely to lower its Official Cash Rate soon.
Traders reacted to a report showing a continued increase in U.S. industrial production in the month of March, which added to concerns about the outlook for interest rates. Traders also remained cautious amid the geopolitical tensions in the middle-east.
U.S. Fed Chair Jerome Powell indicated in remarks that rates are likely to remain higher for longer amid a \"lack of progress\" toward reaching the central bank\'s inflation goal. Fed officials, including Powell, have repeatedly stated they need \"greater confidence\" inflation is slowing before they consider cutting interest rates.
According to CME Group\'s FedWatch Tool, the chances of a 25 basis point rate cut in June have tumbled to 16.4 percent compared to 56.1 percent just a week ago.
In the Asian trading now, the NZ dollar rose to a 2-day high of 91.37 against the yen, from a recent 5-month low of 1.8108. The kiwi may test resistance near the 1.76 region.
In economic news, data from the Ministry of Finance showed that Japan posted a merchandise trade surplus of 366.5 billion yen in March. That beat forecasts for a surplus of 107.4 billion yen following the upwardly revised 377.8 billion yen deficit in February.
Exports were up 7.3 percent on year to 9.469 trillion yen after adding 7.8 percent in the previous month. Meanwhile, imports slumped an annual 4.9 percent to 9.103 trillion yen after rising 0.5 percent a month earlier.
Against the Australian dollar, the kiwi advanced to a 2-day high of 1.0861 from a recent low of 1.0919. On the upside, 1.07 is seen as the next resistance level for the kiwi.
The kiwi edged up to 0.5908 against the U.S. dollar, from a recent low of 0.5861. The next upside resistance level for the kiwi is seen around the 0.61 region.
Moving away from nearly a 5-month low of 1.8108 against the euro, the kiwi edged up to 1.7992. If the kiwi extends its uptrend, it is likely to find resistance around the 1.76 region.
Looking ahead, Eurostat is scheduled to issue euro area final consumer prices for March at 5:00 am ET in the European session.
In the New York session, U.S. MBA mortgage approvals data, U.S. EIA crude oil data and U.S. Fed Beige book report are slated for release.