While most have been willing to view higher inflation as a phenomenon of reopening and bottlenecks in supply and labor, a sharp rise in energy prices is pushing up again inflation and gives rise to doubts.
The pain of energy crises and rising prices is particularly felt in Europe. However, prices have also increased in the United States and Asia, with higher oil and gas prices being passed on to the consumer.
Proof of the concern this arouses among central banks in Asia, the surprise tightening of monetary policy by the Monetary Authority of Singapore (MAS) yesterday. Next Monday, attention turns to New Zealand for the release of third quarter inflation data.
Aside from the drivers of global inflation mentioned above, inflation in New Zealand is fueled by a strong labor market and rising wages, indicating that the risks to Monday’s inflation data are on the rise.
For the record, the market is expecting a price hike of 1.4% q / q, pushing the annual rate above 4% for the first time in a decade. Anything except ensuring that the RBNZ will hike rates again in November and the reason a 25bp hike is at 95%.
Now let’s move on to currency. The NZDUSD outperformed overnight, closing 1% higher near .7037. After testing and rebounding from the front of the low end of the .6850 / 00 range, the bias is for the NZDUSD to test the strong medium term resistance coming from the 200 day average and the trend channel resistance near. 7100.
If the NZDUSD breaks and closes above 0.7100, that would indicate that the correction from the February high of 0.7465 is over and the uptrend has resumed towards 0.7500c.