NZD/JPY hovers above 1-month low as investors look to NZ CPI, BoJ meeting

Key points

The New Zealand Dollar extended losses against the Japanese Yen on Tuesday, as market players awaited New Zealand’s quarterly CPI inflation report due out at 22:45 GMT today.

Annual headline inflation probably slowed to 5.9% in the second quarter, according to market consensus, from 6.7% in Q1. First-quarter inflation rate has been the lowest since Q4 2021, reflecting a slower price increase for transport, housing and household utilities, household contents and health.

A further easing in NZ inflation may add to the case that interest rates have probably reached a peak.

The Reserve Bank of New Zealand left the official cash rate without change at 5.5% at its July meeting, after delivering a total of 525 basis points of rate hikes since October 2021.

Meanwhile, Yen traders look to the Bank of Japan’s policy meeting next week for clues if it will start to phase out its ultra-easy policy stance.

“More market participants have priced in chances of BOJ widening its yield curve control policy’s trading band by 25 bps in the next meeting,” Ryota Abe, an economist at SMBC, was quoted as saying by Reuters.

As of 9:12 GMT on Tuesday NZD/JPY was retreating 0.80% to trade at 87.023. Last week, the minor Forex pair went down as low as 86.214. The latter has been the pair’s weakest level since June 14th (86.064).