NZD/USD sent back from the moon to planet earth on BIG Q4 CPI miss

• NZD/USD sent back a yard or two on CPI miss.
• NZD/USD holding at the 21-4hr SMA, so far.

NZ CPI comes to the rescue to the bears not entirely squeed out of the game with a print so off the mark that it wiped off all the gains made since US Treasury Secretary Mnuchin's "a weaker dollar is good for trade," comment and some. Currently, NZD/USD is trading at 0.7351, down -1.00% on the day, having posted a daily high at 0.7439 and low at 0.7347.

The data arrived as the October - December quarter inflation arriving as 0.1% for the quarter vs the expectations of 0.4% vs the prior 0.5%   while the year/year was equally as poor at 1.6% vs the expected 1.9% and prior 1.9%. 

Kiwi now over valued? 

This was the first major piece of domestic data this year and the bird is at potentially overvalued levels that it might be hard to justify them, so there was plenty of anticipation ahead of today’s Q4 CPI figures. The data brings into question as to whether indeed the rest of the world's central banks are going to be able to play catch up with the Fed's normalisation policy, so this is unlikely to just be a knee-jerk reaction. 

"The question is whether a more broad-based lift in domestic inflation pressures occurs, as that has been remarkably absent over recent times despite clear signs of capacity pressures," explained analysts at ANZ.

NZD/USD levels

NZD/USD has been off the charts of late, with a blue sky rally from the depths of the 0.68 handle to aforementioned highs and there is plenty of downside on the cards with first support being the 21-4hr SMA at 0.7333 before the 0.73 handle and the 504hr SMA in the same vicinity. A break there looks for 16th Jan double bottom of 0.7230/40 guarding 0.7120. To the upside, clearing 0.7450 previous top of H*S shoulders opens 0.7520 July 2017 highs.