The New Zealand dollar gave back ground on Monday, slipping to just under 0.5600 against the US dollar after an early rally. The move reversed nearly half of the gains the currency had made after National took a slim lead in the election count.
The reversal came as hot US consumer price data landed in the same session. October consumer prices rose more than forecast, and annual inflation stood at 3.7 percent in September, near its 31-day high.
Election count lifts the kiwi
National’s lead supported the New Zealand dollar early in the session. Markets expect a National-led government to keep the focus of the Reserve Bank of New Zealand on inflation alone. Labour had pledged a jobs goal for the central bank.
Around 400 thousand special votes remain to be counted, with the final tally due by November 27. National and its partners are projected to win 67 of the 131 seats in parliament.
US data pulls the pair back
The hotter-than-expected US inflation figures pushed the pair down. The New Zealand dollar has now recovered about 40 percent of its drop from the October 22 high of 0.5700.
Kansas City Fed President Schmid said he cannot find restriction from the Fed’s rate outside housing. Traders price the Fed funds rate at 4.50 to 4.75 percent by June. The RBNZ rate sits at 2.75 percent.
Central bank decisions ahead
Both the RBNZ and the Fed decide on December 9. Investors will also watch a Paulson speech on Tuesday, US core producer prices on Friday and a Daly speech later that day.
Related: Euro gives back early gains as eurozone inflation hits 4%
Source: Federal Reserve | Data: FRED — St. Louis Fed
