New Zealand Producer Price Index – Input (QoQ) came in at -0.5%, below expectations (0.5%) in 4Q

💡 DMK Insight

New Zealand’s Producer Price Index dropping to -0.5% is a red flag for inflation expectations: This unexpected decline signals potential deflationary pressures, which could lead to a shift in monetary policy. For traders, this matters because it might prompt the Reserve Bank of New Zealand to reconsider interest rate hikes, impacting the NZD’s strength against major currencies. If the RBNZ adopts a more dovish stance, we could see the NZD weaken, particularly against the USD and AUD, which are already in a bullish trend. Keep an eye on the NZD/USD pair, especially if it breaks below key support levels. On the flip side, if inflation metrics in other regions remain high, the NZD could still find support as a safe haven. Watch for upcoming economic indicators from the U.S. and Australia, as they could further influence NZD’s trajectory. Overall, this PPI reading is a crucial data point to monitor, especially in the context of upcoming central bank meetings.