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New Zealand CPI q/q July 15 2021

What does the data mean to the market?

The Consumer Price Index (CPI) measures the change in the price of goods and services.

A higher than expected number is positive/bullish for the NZD, while a lower than expected number is negative/bearish for the NZD.

Historic deviations and their outcome

April 20 2021 A 0.1 positive deviation caused nearly a 40 pip spike however this was before the central bank moved its monetary policy, It quickly retraced and wouldn't have been a positive outcome if I had traded this event.

Now RBNZ is expected to hike interest rates soon this data will react far better than in the peak of covid lockdowns when interest rates were purposely held at record lows.

Check out the price action here:

January 21 2021 A strong 0.4 positive deviation moved the market some 24 pips with the following continuation after the first minute, this wasn't bad price action and this was when the data wasn't in focus, unlike today.

Check out the price action here:

October 22 2020 A 0.2 negative deviation saw a 30 pip move but the price whipped back and forth for a few minutes after the trade, this wouldn't have been a pleasant ride had I have traded. Today I will be looking for at least a 0.3 dev and this data is now hot so I don't expect to see price action like this.

Check out the price action here:

I will use forecasts of:

CPI (Q/Q) 0.7
CPI (Y/Y) 2.7

Today's trade plan

Today is the first time we get to trade NZ CPI, since the RBNZ reduced their stimulus, and indicated to the market that they were getting ready to hike interest rates, we have a 50/50 chance of a hike in August. It's been a long time since we've been in this position and the markets love it.

Today's CPI report and the Employment report before the decision is made are the two key pieces of data the market is watching closely. so expect some fireworks,

We know that RBNZ has said that they will look through strong CPI numbers however I don't think the market will ignore them!

If we see a 0.3 deviations in either direction from either line as long as both lines do not conflict, we should see a sustained move on all NZD pairs!

The two lines of data are


Tradable pairs


Hope this helps but please do your own analysis!!

Good luck!!

James Thatcher

Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. Past performance is not indicative of future results. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.
As my analysis predicted, we saw fireworks, with a very strong 0.5 positive deviation from the forecast, which saw a significant spike of over 50 pips.

It's great that the markets are so focused on this data.

The next piece of data from New Zealand before the rate decision will be the employment data on the 3rd of August 2021.

Keep watching this space for trade plans and analysis.

See Chart here: