NZD Dips Below 200-Day Moving Average Amid Mixed Inflation Expectations

The New Zealand Dollar (NZD) slipped briefly below its 200-day moving average as the Reserve Bank of New Zealand's Q3 inflation expectations survey showed mixed but well-anchored readings near the 2% midpoint. The NZD/USD exchange rate dropped under 0.5832, sparking concerns about additional hikes from the central bank. According to Elias Haddad of Brown Brothers Harriman (BBH), the RBNZ's Q3 inflation expectations survey showed a decrease in one-year-ahead annual CPI inflation by -81bps to 2.60%, two-year ahead decreased by -19bps to 2.34%, five-year-ahead increased by +9bps to 2.31%, and ten-year ahead increased by +1bps to 2.20%. Haddad notes that despite these mixed results, above target inflation, stronger domestic growth, and a policy rate near the lower end of neutral argue for additional RBNZ hikes. The swaps curve fully prices in 75bps of tightening over the next twelve months to 3.25%, which bodes well for the NZD.