The New Zealand Dollar (NZD) closed the week stronger against the US Dollar (USD), rising 0.55% to 0.5652. This move came despite the USD weakening as investors grew skeptical about a Federal Reserve rate hike in October, even after the US reported strong inflation data.
US consumer inflation for September came in at 3.7% year-over-year, exceeding estimates of 3.6%, while producer inflation surged to 6.3% year-over-year, up from forecasts of 5.3%. Despite these figures, the probability of a Fed rate hike in October remains low at 16%, according to Prime Terminal data. Fed officials, including Cleveland Fed's Beth Hammack, emphasized the need for patience, suggesting a December hike is more likely.
In New Zealand, the economic calendar is light, but upcoming releases like the Trade Balance on October 18 and the Consumer Price Index (CPI) for Q3 could influence the NZD. If the CPI data surprises on the upside, it may push investors to fully price in a rate hike by the Reserve Bank of New Zealand (RBNZ) at its October 28 meeting, currently seen as an 85% probability.
Technically, the NZD/USD pair rebounded from a low of 0.5580-0.5600, reaching an 11-day high of 0.5674 before settling. While daily moving averages suggest a bearish bias, the Relative Strength Index (RSI) indicates a shift toward bullish momentum, hinting at a potential early-stage reversal.